BC Co. a December 31 year end company, conducts base research in organic and environmentally safe plant food and garden fertilizers. The company is completely downstream integrated, having the manufacturing ability to produce, market and sell successful and regulatory certified product to wholesale distributors and even through Amazon. You are auditing BC Co.s accounts for the year ended December 31, 2020.

BC Co. follows the accounting standard requiring expensing all Research and Development (R&D) costs. Development costs are only deferred (Deferred Development Costs, an intangible asset) if formulations are evaluated as meeting the criteria of becoming commercially viable. Once deferred, the development costs are amortized over three years, straight line commencing in the year of expenditure and un-prorated by month; that is an entire year is amortized irrespective of what month the expenditure was incurred.

Your analytical audit procedures identify an anomaly in the level of deferred development costs and you identify that R&D costs for 2019 and 2020 were erroneously deferred when they should have been expensed. You quantified the R&D costs erroneously deferred by year: 2019 - $39,000, 2020 - $45,000 and the amounts are considered material to BC Co.s results. BC Co has a 30% tax rate.

Following are the 2019 published amounts and the unaudited 2020 results of the excerpted Statement of Retained Earnings:

	2020 Draft	2019
Retained earnings, beginning	$280,000	$180,000
Net income, after tax	$180,000	$160,000
Dividends declared Dividends paid	$80,000 $90,000	$60,000 $55,000

Required #1: Prepare all applicable entries required relating to this situation.

Required #2: Prepare, in good form, a revised Statement of Retained Earnings for the years ended December 31, 2020 and 2019.

	2020	2019
Retained earnings, as reported	$280,000	$180,000