Dyke Company's net incomes for the past three years are presented below: During the 2012 year-end audit, the following items come to your attention:

1. Dyke bought a truck on January 1, 2009 for $196,000 with a $16,000 estimated salvage value and a six-year life. The company debited an expense account and credited cash on the purchase date for the entire cost of the asset. (Straight-line method).
2. During 2012, Dyke changed from the straight-line method of depreciating its cement plant to the double-declining balance method. The following computations present depreciation on both bases:

The net income for 2012 was computed using the double-declining balance method, on the January 1, 2012 book value, over the useful life remaining at that time. The depreciation recorded in 2012 was $72,000.
3. Dyke, in reviewing its provision for uncollectible during 2012, has determined that 1% is the appropriate amount of bad debt expense to be charged to operations. The company had used 1/2 of 1% as its rate in 2011 and 2012 when the expense had been $18,000 and $12,000, respectively. The company recorded bad debt expense under the new rate for 2012. The company would have recorded $6,000 less of bad debt expense on December 31, 2012 under the old rate.

Instructions
(a) Prepare in general journal form the entry necessary to correct the books for the transaction in part 1 of this problem, assuming that the books have not been closed for the current year.
(b) Compute the net income to be reported each year 2010 through 2012.
(c) Assume that the beginning retained earnings balance (unadjusted) for 2010 was $1,260,000. At what adjusted amount should this beginning retained earnings balance for 2010 be stated, assuming that comparative financial statements were prepared?
(d) Assume that the beginning retained earnings balance (unadjusted) for 2012 is $1,800,000 and that non-comparative financial statements are prepared. At what adjusted amount should this beginning retained earnings balance bestated?

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2010 $480,000 $450,000 $360,000 Straight-line Double-declining 2012 36,000 46,080 2011 36,000 57,600 2010 36,000 72,000