Closing entries included debits to revenues for a total of $8,000 credits to expenses for a total of $4,100, and a credit to dividends for $650. The net change in Retained Earnings for the month was:
A)cannot be calculated with the information provided.
B)$3,250.
C)$3,900.
D)$4,550.

Question

Quizplus · Accepted Answer

Closing entries reduce revenues and expenses to zero and transfer the net income or loss to retained earnings. The net change in retained earnings is the difference between the total debits and credits to retained earnings. In this case, the only credit to retained earnings is for $650, so the net change in retained earnings is $650.

Closing Entries Included Debits to Revenues for a Total of $8,000