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To determine the balance of Retained Earnings as of December 31, Year 1, we need to follow these steps:

### Steps to calculate Retained Earnings:
1. **Revenue (from services provided)**:
   - $27,000 (services provided for cash)
   - $16,000 (services provided on account)
   - **Total Revenue = $27,000 + $16,000 = $43,000**

2. **Expenses**:
   - Operating expenses: $23,000
   - Salary expense: $1,900
   - **Total Expenses = $23,000 + $1,900 = $24,900**

3. **Net Income (Revenue - Expenses)**:
   \[
   \text{Net Income} = 43,000 - 24,900 = 18,100
   \]

4. **Dividends Paid**:
   - Dividend: $15,000 (to stockholders)

5. **Retained Earnings Calculation**:
   \[
   \text{Retained Earnings} = \text{Net Income} - \text{Dividends}
   \]
   \[
   \text{Retained Earnings} = 18,100 - 15,000 = 3,100
   \]

### Answer:
The **Retained Earnings** as of December 31, Year 1, is **$3,100**.

Would you like more details or have any questions?

### Follow-up questions:
1. How would an increase in operating expenses affect retained earnings?
2. What is the significance of retained earnings for a company?
3. How would borrowing from the bank impact the balance sheet?
4. What would happen if dividends were not paid out?
5. How does accrued salary affect the financial statements?

**Tip**: Retained earnings represent the portion of a company's net income that is retained for future use, instead of being paid out as dividends. It's an important indicator of financial health and growth potential.

After closing, what is the balance of the Retained Earnings account as of December 31, Year 1?

Learn how to calculate the retained earnings for Warren Enterprises as of December 31, Year 1. This problem covers key financial concepts like net income, revenue, expenses, and dividend distribution.

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