What is the retained earnings closing balance?

Sales 209,905
Unearned revenue 1,191
Interest revenue 6,876
Interest receivable 14,452
Cost of sales (39,654)
Income tax expense (2,566)
Dividends (8,425)
Selling expense (9,546)
Administration expense (9,209)
Other expense (4,913)
Retained earnings, opening balance 150,689

Question

What is the retained earnings closing balance?

Sales	209,905
Unearned revenue	1,191
Interest revenue	6,876
Interest receivable	14,452
Cost of sales	(39,654)
Income tax expense	(2,566)
Dividends	(8,425)
Selling expense	(9,546)
Administration expense	(9,209)
Other expense	(4,913)
Retained earnings, opening balance	150,689

BlackTom AI · Accepted Answer

First, I’ll restate the data supplied and identify which items affect retained earnings.
- Retained earnings opening balance: 150,689
- Sales (revenue): 209,905
- Interest revenue: 6,876
- Cost of sales (expense): (39,654)
- Income tax expense: (2,566)
- Dividends: (8,425)
- Selling expense: (9,546)
- Administration expense: (9,209)
- Other expense: (4,913)
- Note: Unearned revenue and interest receivable do not directly affect net income in this period for the purpose of calculating retained earnings closing balance, so they are not included in the net income calculation here.

Now, I’ll compute net income for the period by summing revenues and subtracting expenses.
- Total revenues = Sales + Interest revenue = 209,905 + 6,876 = 216,781
- Total expenses = Cost of sales + Income tax expense + Selling expense + Administration expense + Other expense = 39,654 + 2,566 + 9,546 + 9,209 + 4,913 = 65,888
- Net income = Total revenues − Total expenses = 216,781 − 65,888 = 150,893

With net income determined, I’ll apply the standard retained earnings formula: Closing Retained Earnings = Opening Retained Earnings + Net Income − Dividends.
- Opening retained earnings = 150,689
- Net income = 150,893
- Dividends = 8,425
- Closing retained earnings = 150,689 + 150,893 − 8,425 = 301,582 − 8,425 = 293,157

For clarity, if someone expected a different figure (for example 193,157), that would imply a different net income value or dividend treatment (such as omitting interest revenue or misclassifying items). The calculation shown above follows the standard approach: add net income to opening retained earnings and subtract dividends to arrive at the closing balance.

To double-check, I’ll summarize the key arithmetic in a compact form:
- Net income = (209,905 + 6,876) − (39,654 + 2,566 + 9,546 + 9,209 + 4,913) = 216,781 − 65,888 = 150,893
- Closing retained earnings = 150,689 + 150,893 − 8,425 = 293,157

If you’re comparing with another result, revisit whether all revenue and expense items were included consistently (especially whether any items like interest revenue are treated as ordinary income or excluded for a particular purpose).

BACC011 Week 5: Practice Quiz

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