Gerdes Psychological Services, Inc., closes its temporary accounts once each year on Dec 31.

The company recently issued the following income statement as part of its annual report:

Revenue:

Counseling revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $225,000

Expenses:

Advertising expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,800

Salaries expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,000

Office supplies expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200

Utilities expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 850

Malpractice insurance expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000

Office rent expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,000

Continuing education expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,650

Depreciation expense: fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500

Miscellaneous expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000

Income taxes expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,400

170,400

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 54,600

The firms statement of retained earnings indicates that a $6,000 cash dividend was declared and paid during 2011.

a. Prepare the necessary closing entries on December 31, 2011.

b. If the firms Retained Earnings account had a $92,000 balance on January 1, 2011, at what amount should Retained Earnings be reported in the firms balance sheet dated December 31, 2011?