Millertown Limited decided to change from the weighted average method of valuing inventory to the FIFO method in 2023 to present more relevant information for its financial statement users. The cumulative effect on prior years of a retrospective application of the new inventory costing method was determined to be $30,000 with an income tax impact of $6,000 for a net change of $24,000. Cost of goods sold is higher and ending inventory lower for the preceding period.

Millertown discovered that at the beginning of the previous year, it capitalized $40,000 as Equipment when this amount should have been charged to Repairs Expense. Depreciation of $5,000 was recorded in the previous year. Presume an income tax rate of 20% applies to any income statement adjustments for this issue.

Retained earnings on January 1, 2023 was $300,000.

make statement of retained earnings