Clean, Inc., a household products chain, reported a prior-period adjustment in 2012. An accounting error caused net income of 2011 to be understated by $15 million. Retained earnings at December 31, 2011, as previously reported, was $346 million. Net income for 2012 was $93 million, and 2012 dividends were $60 million.

Requirement

1. Prepare the company’s statement of retained earnings for the year ended December 31, 2012. 

2. How does the prior-period adjustment affect Clean’s net income for 2012?