Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

BNSF has a retained earnings balance of $430,000 on January 1, 2023. During the year, it reported net income of $60,000 and paid out cash

BNSF has a retained earnings balance of $430,000 on January 1, 2023. During the year, it reported net income of $60,000 and paid out cash dividends of $8,900. In April 2023, BNSF's auditor discovered that the company understated its sales revenues of 2020 with a net of tax amount of $7,500. How the correction of this error would affect BNSF's 2023 financial statements? No effect because revenue was understated in 2020 instead of 2023. O January 1's retained earnings would be adjusted to be $437,500. O Net income of 2023 would decrease by $7,500 to be $52,500. O December 31's retained earnings would be $481,100.
image text in transcribed
BNSF has a retained earnings balance of $430,000 on January 1, 2023. During the year, it reported net income of $60,000 and paid out cash dividends of $8,900. In April 2023, BNSF's auditor discovered that the company understated its sales revenues of 2020 with a net of tax amount of $7,500. How the correction of this error would affect BNSF's 2023 financial statements? No effect because revenue was understated in 2020 instead of 2023. January 1 's retained earnings would be adjusted to be $437,500. Net income of 2023 would decrease by $7,500 to be $52,500. December 31's retained earnings would be $481,100

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Walter B. Meigs, Robert F. Meigs, Mark Bettner, Ray Whittington

9th Edition

0070434360, 978-0070434363

More Books

Students also viewed these Accounting questions

Question

Explain key approaches to implementing LMD

Answered: 1 week ago