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Presented below are the comparative income and retained earnings statements for Windsor Inc. for the years 2020 and 2021. 2021 2020 Sales $310,000 $275,000 Cost
Presented below are the comparative income and retained earnings statements for Windsor Inc. for the years 2020 and 2021.
2021 | 2020 | |||||
Sales | $310,000 | $275,000 | ||||
Cost of sales | 180,000 | 135,000 | ||||
Gross profit | 130,000 | 140,000 | ||||
Expenses | 88,600 | 46,800 | ||||
Net income | $41,400 | $93,200 | ||||
Retained earnings (Jan. 1) | $142,200 | $72,500 | ||||
Net income | 41,400 | 93,200 | ||||
Dividends | (29,500 | ) | (23,500 | ) | ||
Retained earnings (Dec. 31) | $154,100 | $142,200 |
The following additional information is provided:
1. | In 2021, Windsor Inc. decided to switch its depreciation method from sum-of-the-years digits to the straight-line method. The assets were purchased at the beginning of 2020 for $107,000 with an estimated useful life of 4 years and no salvage value. (The 2021 income statement contains depreciation expense of $32,100 on the assets purchased at the beginning of 2020.) | |
2. | In 2021, the company discovered that the ending inventory for 2020 was overstated by $24,800; ending inventory for 2021 is correctly stated. |
Prepare the revised retained earnings statement for 2020 and 2021, assuming comparative statements. (Ignore income taxes.)
WINDSOR INC. Retained Earnings Statement For the Year Ended 2021 2020 $ v : > v : V: > $ $Step by Step Solution
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