The closing entries show a debit to Retained Earnings of $350, and a credit to Retained Earnings of $760. There was also a credit to Dividends Payable of $120. This company had a:
A)net loss of $410.
B)net income of $410.
C)net loss of $530.
D)net income of $530.

Question

Quizplus · Accepted Answer

The net income is calculated by subtracting the total debits from the total credits to Retained Earnings. Here, $760 credit - $350 debit = $410 net income. The Dividends Payable credit does not affect the calculation of net income or loss.

The Closing Entries Show a Debit to Retained Earnings of $350