Step 1: Identify the components of retained earnings calculation. The formula for closing retained earnings is: $$ \text{Closing Retained Earnings} = \text{Opening Retained Earnings} + \text{Net Profit for the year} - \text{Dividend paid} - \text{Profit transfer to sinking fund} - \text{Profit transfer to general reserve} $$ Step 2: Substitute the given values into the formula. • Opening Retained earnings: Rs. 20,000 • Net profit for the year: Rs. 40,000 • Dividend paid: Rs. 15,000 • Profit transfer to sinking fund: Rs. 6,000 • Profit transfer to general reserve: Rs. 14,000 $$ \text{Closing Retained Earnings} = \text{Rs. } 20,000 + \text{Rs. } 40,000 - \text{Rs. } 15,000 - \text{Rs. } 6,000 - \text{Rs. } 14,000 $$ Step 3: Perform the calculation. $$ \text{Closing Retained Earnings} = \text{Rs. } 60,000 - \text{Rs. } 15,000 - \text{Rs. } 6,000 - \text{Rs. } 14,000 $$ $$ \text{Closing Retained Earnings} = \text{Rs. } 45,000 - \text{Rs. } 6,000 - \text{Rs. } 14,000 $$ $$ \text{Closing Retained Earnings} = \text{Rs. } 39,000 - \text{Rs. } 14,000 $$ $$ \text{Closing Retained Earnings} = \text{Rs. } 25,000 $$ The closing retained earnings are: $$ \boxed{\text{Rs. } 25,000} $$ 3 done, 2 left today. You're making progress.