Question
Preparing a Statement of Stockholders' Equity with a Prior Period Error In 2019, the first year of operations for Sprint Co., the company reported net
Preparing a Statement of Stockholders' Equity with a Prior Period Error
In 2019, the first year of operations for Sprint Co., the company reported net income of $81,000 and declared and paid dividends of $25,200. No other items affected retained earnings in 2019. On December 31, 2019, the company had the following balances in stockholders' equity accounts (other than retained earnings): common stock, $180,000 credit balance; accumulated other comprehensive income, $9,000 debit balance. During 2020, the company reported net income of $158,400, declared and paid dividends of $36,000, and reported a foreign currency translation gain of $15,300 (after tax). Also in 2020, the company discovered that its 2019 depreciation expense was understated by $18,000 before taxes and the amount is material to the company. Assume a tax rate of 25%.
Required
a. statement of stockholders' equity for Sprint Co. for the year ended December 31, 2020.
- Use negative signs to indicate a debit balance or a decrease to stockholders' equity.
Sprint Co.Statement of Stockholders' Equity For the Year Ended December 31, 2020
Common Stock Retained Earnings Accumulated OCI Total
Beginning balance
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Prior period adjustment
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Net income
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Dividends
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Other Comprehensive Income
Foreign currency translation
adjustment, net of tax
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Ending balance
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b. separate statement of retained earnings for the year ended December 31, 2020.
- Use negative signs to indicate a debit balance or a decrease to stockholders' equity.
Sprint Co.Statement of Retained Earnings For the Year Ended December 31, 2020 Retained earnings, January 1, 2020 Answer
Prior period adjustment
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Adjusted balance, January 1, 2020
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Net income
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Dividends
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Retained earnings, December 31, 2020
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