7) The second financial statement to prepare is the statement of retained eamings. To determine the ending balance of retained earnings you need to start with the opening balance as reported in the last balance sheet, in this case let's assume it was $1,655.32 (if the case is about the first period in the life of a company the opening balance is zero), add the net income of the period (or subtract the net loss of the period) and subtract the dividends declared in the period. All transactions are journalized and posted: Entry# Date Accounts Dr Cr 24 July 31st Income Summary 1823.00 Retained Earnings 1823.00 Accumulate current income in RE 25 July 31st Dividends 1000.00 Dividends Payable 1000.00 Declare dividends of the period 26 July 31st Retained Earnings 1000.00 Dividends 1000.00 Deduct Dividends from RE Income Summary Dividends Dividends Payable Retained Earnings Dr Cr Dr 1823.00 1000.00 1823.00 1000.00 Cr Dr Cr Dr 1000.00 Cr 1655.32 1823.00 1000.00 Date Order Account Type of Account Dr Cr 31 July 44 Revenue Services Revenue 3,300.00 Cost of goods sold Expense 325 Accountant Fee Expense Expense 150 Bank Service expense Expense 52 Electrician Expense Expense 80 Interest Expense Expense 25 Insurance Expense Expense 25 Phone Expense Expense 45 Promotion and Publicity Expense Expense 67 Depreciation expense-Tools Expense 180 Office supplies expense Expense 70 Rent Expense Expense 100 Supplies Expense Expense 133 Income Tax Expense Income Summary Explanation: closing of temporary accounts to determine Net Income for the month of July 2021 Expense 225 Temp 1823.00