Question
Maher Inc. reported the following data for 2020: Net income $ 442,000 Retained earnings, January 1 104,000 Dividends 120,000 Income tax rate for all years
Maher Inc. reported the following data for 2020:
Net income | $ 442,000 | Retained earnings, January 1 | 104,000 |
Dividends | 120,000 | Income tax rate for all years | 20% |
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Additional information for 2020 are as follows.
1. | A machine originally purchased at the beginning of 2019 for $54,000 was depreciated on a straight-line basis with a salvage value of $9,000 and a useful life of 6 years. In 2020, the company extended the useful life to a total of ten years. Depreciation for 2020 was recorded using the new useful life. |
2. | The corporation changed its method of inventory costing from weighted average cost to the FIFO method in 2020. The effect of this change increased 2018 pretax income by $40,000 and increased 2019 pretax income by $20,000. The FIFO method was used for 2020. |
Instructions: Prepare a statement of retained earnings.
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