P4.7

(Retained Earnings Statement, Prior Period Adjustment) The following is the retained earnings account for the year 2019 for Acadian Corp.

Retained earnings, January 1, 2019 $257,600

Add:

Gain on sale of investments $41,200

Net income 84,500

Refund on litigation with government 21,600

Recognition of income earned in 2018, but omitted from income statement in that year 25,400 172,700 430,300

Deduct: Loss on discontinued operations 35,000

Write-off of goodwill 60,000

Cumulative effect on income of prior years in changing from average-cost to FIFO inventory valuation in 2019 23,200

Cash dividends declared 32,000 150,200

Retained earnings, December 31, 2019 $280,100

Instructions a. Prepare a corrected retained earnings statement. (Ignore income tax effects.) FIFO inventory was used in 2019 to compute net income. b. State where the items that do not appear in the corrected retained earnings statement should be shown.