The following accounts and balances are taken from Moore Company's adjusted trial balance:

Accounts Payable $8,000

Accounts Receivable 3,400

Accumulated Depreciation 1,400

Depreciation Expense 1,800

Dividends 2,800

Insurance Expense 2,300

Interest Revenue 1,240

Prepaid Insurance 2,220

Retained Earnings 10,600

Salary Expense 23,100

Service Revenue 35,800

Required:

What is the ending balance in Retained Earnings after the closing entries are completed?

Retained earnings = Beginning period retained earnings + Net income - Cash dividends - Stock dividends.

We need to find the net income and in order to do that we need to identify all the revenues and expenses.

Interest Revenue = 1,240

Service Revenue = 35,800

Total revenue = 35,800 + 1,240 = 37,040

Now we need to find all the expenses

Depreciation expense = 1800

Insurance expense = 2,300

Salary expense = 23,100

Total expense = 1,800 + 2,300 + 23,100 = 27,200

Net income = 37,040 - 27,200 = 9,840

Now we will put all these values in our formula to find the ending balance in retained earnings.

Beginning period retained earnings = 10,600

Net income = 9,840

Cash dividends = 2,800

Stock dividends = 0

Ending retained earning balance = 10,600 + 9,840 - 2,800 = 17,640