Did Retained Earnings increase or decrease during the year? What caused the increase or decrease?
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(Learning Objective 5: Making closing entries and evaluating retained earnings) The accounts of Cookie Lapp eTravel, Inc., at December 31, 20X5, are listed in alphabetical order.
Accounts payable
$ 5,100
Note payable, long-term
$10,600
Accounts receivable
800
Other assets
3,600
Accumulated depreciation furniture
6,600
Retained earnings, December 31, 20X4
7,700
Interest expense
11,600
Supplies
93,500
Advertising expense
2,200
Service revenue
5,300
Cash
7,300
Salary expense
24,600
Common stock
15,000
Salary payable
3,900
Depreciation expense
1,300
Supplies expense
5,700
Dividends
47,400
Unearned service revenue
3,600
Furniture
41,400
Required
1. All adjustments have been journalized and posted, but the closing entries have not yet been made. Journalize Lapp’s closing entries at December 31, 20X5.
2. Set up a T-account for Retained Earnings and post to that account. Then compute Lapp’s net income for 20X5. What is the ending balance of Retained Earnings?
3. Did Retained Earnings increase or decrease during the year? What caused the increase or decrease?