Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Presented below are the comparative income statements for Watson Industries for the years 2023 and 2024, prior to the information provided in the bulleted list
Presented below are the comparative income statements for Watson Industries for the years 2023 and 2024, prior to the information provided in the bulleted list below. Assume no taxes exist. 2024 2023 Sales $660,000 $600,000 Cost of Sales 430,000 390,000 Gross Profit 230,000 210,000 Expenses 180,000 170,000 Net Income $ 50,000 $ 40,000 $ 89,000 Retained Earnings, Jan. 1 Net Income Dividends Retained Earnings, Dec. 31 $117,000 50,000 _(15,000) $152,000 40,000 _(12,000) $117,000 In 2024, the company decided to switch depreciation methods from sum-of-the-years-digits to the straight-line method. The assets were purchased at the beginning of 2023 for $150,000 with an estimated useful life of 5 years and no salvage value. The 2023 Net Income of $40,000 is based on SYD. In 2024, the company discovered that the ending inventory for 2023 was understated by $13,000. . Prepaid expenses of $4,000 were omitted in 2023. In the revised financial statements, the 12/31/23 Retained Earnings would be: Select one: a. $117,000 b. $134,000 c. $130,000 d. $126,800 e. $108,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started