Problem
On January 1, 2021, ACME Incorporated had a balance of $288,700 in its Retained Earnings account. During the year, it declared $60,000 of cash dividends and paid $55,000. Its profit after tax in 2021 was $109,000, calculated as follows:
Sales $515,000
Cost of goods sold $212,500
Selling expense 65,000
Income tax expense 28,500 306,000
Profit $209,000
Task
• Prepare a statement of retained earnings for the year ended. in good form, in the form provided.
• Prepare closing entries in the general journal provided.