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Blossom Corporation began operations on January 1, 2014. During its first 3 years of operations, Blossom reported net income and declared dividends as follows:
Blossom Corporation began operations on January 1, 2014. During its first 3 years of operations, Blossom reported net income and declared dividends as follows: Net income Dividends declared 2014 $173,000 $ -0- 2015 512,000 210,000 2016 661,000 210,000 The following information relates to 2017. Income before income tax $910,000 Prior period adjustment: understatement of 2015 depreciation expense (before taxes) $104,000 Cumulative decrease in income from change in inventory methods (before taxes) $164,000 Dividends declared (of this amount, $104,000 will be paid on Jan. 15, 2018) $420,000 Effective tax rate 40 %
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