Preparing a Statement of Stockholders Equity with a Prior Period Error

In the first year of operations for Sprint Co., the company reported net income of $72,000 and declared and paid dividends of $22,400. No other items affected retained earnings during its first year. On December 31, the company had the following balances in stockholders equity accounts (other than retained earnings): common stock, $160,000 credit balance; accumulated other comprehensive income, $8,000 debit balance. During the following year, the company reported net income of $140,800, declared and paid dividends of $32,000, and reported a foreign currency translation gain of $13,600 (after tax). In addition, the company discovered that its first year depreciation expense was understated by $16,000 before taxes and the amount is material to the company. Assume a tax rate of 25%.

Required

a. Prepare a statement of stockholders equity for Sprint Co. for the current year ended December 31.

• Use negative signs to indicate a debit balance or a decrease to stockholders' equity.