EXERCISE 5.7 Closing Entries of a Profitable Company LO5-2, LO5-4 Fick Psychological Services, Inc., closes its temporary accounts once each year on December 31. The company recently issued the following income statement as part of its annual report. FICK PSYCHOLOGICAL SERVICES, INC. INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, CURRENT YEAR Revenue: Counseling revenue Expenses: Advertising expense Salaries expense Office supplies expense Utilities expense Malpractice insurance expense Office rent expense Continuing education expense Depreciation expense: fixtures Miscellaneous expense Income taxes expense $350,000 $ 6,000 180,000 2,000 3,000 9,000 42,000 5,000 8,000 4,000 36,000 295,000 Net income $ 55,000 Fick's statement of retained earnings indicates that a $15,000 cash dividend was declared and paid during the current year. a. Prepare the necessary closing entries on December 31 of the current year. b. If Fick's Retained Earnings account had a $600,000 balance on at the beginning of the current year, at what amount should Retained Earnings be reported in the firm's year-end balance sheet dated December 31?