Presented below are the comparative income and retained earnings statements for Martinez Inc. for the years 2017 and 2018.

		2018			2017
Sales		$334,000			$264,000
Cost of sales		217,000			144,000
Gross profit		117,000			120,000
Expenses		95,200			50,700
Net income		$21,800			$69,300
Retained earnings (Jan. 1)		$121,700			$76,300
Net income		21,800			69,300
Dividends		(31,400	)		(23,900	)
Retained earnings (Dec. 31)		$112,100			$121,700

The following additional information is provided:

1.		In 2018, Martinez 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 2017 for $106,500 with an estimated useful life of 4 years and no salvage value. (The 2018 income statement contains depreciation expense of $31,950 on the assets purchased at the beginning of 2017.)
2.		In 2018, the company discovered that the ending inventory for 2017 was overstated by $24,200; ending inventory for 2018 is correctly stated.

Prepare the revised retained earnings statement for 2017 and 2018, assuming comparative statements. (Ignore income taxes.)

MARTINEZ INC. Retained Earnings Statement For the Year Ended

	2018	2017
RETAINED EARNINGS, JANUARY 1, UNADJUSTED
LESS: CORRECTION OF ERROR FOR INVENTORY OVERSTATEMENT
RETAINED EARNINGS, JANUARY 1, ADJUSTED
ADD: NET INCOME
LESS: DIVIDENDS
RETAINED EARNING, DECEMBER 31