Questions: At April 1, 2022, Spiderland Company reported a balance of 20,000 in the Retained Earnings account. Spiderland Company earned revenues of 50,000 and incurred expenses of 32,000 during April 2022. The company paid dividends of 10,000 during the month. What is the balance in Retained Earnings on the April 30, 2022, post-closing trial balance? 12,000 28,000 18,000 10,000

Solution Steps

To determine the balance in Retained Earnings on April 30, 2022, we need to follow these steps:

1. Start with the initial balance in the Retained Earnings account on April 1, 2022.
2. Add the revenues earned during April 2022.
3. Subtract the expenses incurred during April 2022.
4. Subtract the dividends paid during April 2022.

The initial balance in the Retained Earnings account on April 1, 2022, is given as: \[ \text{Initial Balance} = 20000 \]

To find the net income for April 2022, we calculate: \[ \text{Net Income} = \text{Revenues} - \text{Expenses} = 50000 - 32000 = 18000 \]

Next, we adjust the Retained Earnings for the dividends paid: \[ \text{Final Balance} = \text{Initial Balance} + \text{Net Income} - \text{Dividends} \] Substituting the values: \[ \text{Final Balance} = 20000 + 18000 - 10000 = 28000 \]

Final Answer