Broadfoot Bakeries Inc. reported retained earnings of $394,000 on December 31, 2023. For the year ended December 31, 2024, the company had profit of $128,000, and it declared and paid dividends of $44,000. Assuming the company reports under ASPE, and referring to the data for Broadfoot Bakeries in BE14.9, prepare a statement of retained earnings.

Data from BE14.9

On March 1, 2024, Broadfoot Bakeries Inc. discovered that the cost of Land purchased in 2023 was erroneously recorded as rent expense. The cost of the Land was $5,000. The company’s year end is December 31 and the income tax rate is 20%. Prepare the journal entry to correct this error.