Question

The following account balances are taken from the books of Country Club on 31 December 2017. Revenues and expenses are for the year ended 31 December 2017. The retained profits balance is as at 1 January 2017.





Account


Value ($)


Accounts Receivable


29806


Accounts Payable


25280


Promotional Expense


54742


Cash


5028.2


Food Sales


15611


Cost of food sold


13798


Dividend payments


8209


Electricity Expense


6432


Furniture and fittings


42,500


Inventory


22,500


Land and buildings


75,000


Bank loan payable


43,750


Equipment


51,250


Rent expense


40546


Retained profits (1 January 2017)


74022


Share capital


75,000


Membership revenue


103263


Calculate the retained earnings for the year ended 31 December 2017.

Answer 1

RP_(31.12.2017) = RP_(1.1.2017) + Net profit – Dividends

Net profit = Revenue - Expense

Net profit = (15611 + 103263) - (40546 +13798 + 54742 + 6432) = 3356

RP_(31.12.2017) = 74022 + Net profit – Dividends

RP_(31.12.2017) = 74022 + 3356 - 8209 = 69169