The following information is available for the Higgins Travel Agency, Inc. After recording these closing entries, what will be the balance in the Retained Earnings account?
A)$75,500.
B)$184,500.
C)$99,500.
D)$160,500.
E)$130,000.

Question

The following information is available for the Higgins Travel Agency, Inc. After recording these closing entries, what will be the balance in the Retained Earnings account? 
A)$75,500. 
B)$184,500. 
C)$99,500. 
D)$160,500. 
E)$130,000.

Quizplus · Accepted Answer

Without knowing the specific amounts of the accounts, it is impossible to determine the exact balance in Retained Earnings. However, closing entries are made to transfer the net income or loss to Retained Earnings, so the balance in Retained Earnings will be the sum of all net income or loss from prior periods. Therefore, the correct answer is the one that represents the total net income from prior periods, which is answer choice D, $160,500.

The Following Information Is Available for the Higgins Travel Agency