Ferraro Consulting provides risk management services to individuals and to corporate clients. The company closes its temporary accounts once each year on December 31. The company recently issued the following income statement as part of its annual report:

a. The firm’s statement of retained earnings indicates that a $25,000 cash dividend was declared and paid in 2011.
b. Prepare the necessary closing entries on December 31, 2011.
If the firm’s Retained Earnings account had a $300,000 balance on January 1, 2011, at what amount should Retained Earnings be reported in the firm’s balance sheet dated December 31,2011?

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FERRARO CONSULTING INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2011 Revenue Consulting revenue-individual clients -. Consulting revenue -corporate clients 40,000 160,000 $200,000 . Expenses Advertising expense Depreciation expense: computers Rent expense Office supplies expense... . Travel expense Utilities expense Telephone and Internet expense . Salaries expense Interest expense 16,000 24,000 9,600 4,400 57,800 3,300 1,900 155,500 .. --. 2,500 275,000 S (75,000) Net loss