Question 10BE
Question
Using the information from BE4-9, prepare a retained earnings statement for the year ended December 31, 2017. Assume an error was discovered: land costing $80,000 (net of tax) was charged to maintenance and repairs expense in 2014.
Step-by-Step Solution
Verified Answer
The Retained Earnings Statement shows a balance of $2,080,000 as of December 31, 2017.
1Meaning of Retained Earnings Statement
Retained earnings statement refers to a financial statement that explains the change in the amount of retained earnings for a specific period.
2Preparation of retained earnings statement for the year ended December 31, 2017.
| Retained Earnings Statement | |
| For the Year Ended December 31, 2017 | |
Retained Earnings on January 1, 2017 | $675,000 |
Correction for overstatement of expenses | $80,000 |
Retained Earnings on January 1 after adjustment | $755,000 |
Add: Net Income | $1,400,000 |
Less: Cash Dividends | ($75,000) |
Retained Earnings balance on December 31,2017 | $2,080,000 |
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