Problem: Consider the following information related to ABC Inc.:

ABC Inc. began operations on January 1, Y1. During its first 3 years of operations, ABC reported net income after taxes and declared dividends as follows:

Date Net Income Dividends

Y1 $150,000 $0

Y2 $75,000 $10,000

Y3 $125,000 $0

Y4 $150,000 $50,000

The following information relates to Y5:

• Y5 net income was originally calculated as $160,000 (after tax) and $40,000 in dividends were declared during Y5.
• ABC is charged a tax rate of 40%.
• During Y5, ABC decided to change its depreciation method from double-declining balance method to straight-line for some of its assets. This resulted in a pre-tax decrease in annual depreciation expense of $10,000. This impact was not included in the Y5 net income listed in the first bullet point because ABC made this change after they generated the Y5 net income amount.
• Additionally in Y5, ABC discovered that they understated a gain on the sale of equipment in Y3 by $25,000 and understated Y4 depreciation expense by $30,000.
• At the end of Y5, after the net income reported in the first bullet above was calculated, ABC decided to change from LIFO to FIFO. The following COGS information was determined under each method. The net income number given in the first bullet point was calculated for Y5 using LIFO.

Date FIFO COGS LIFO COGS

Y1 $135,000 $120,000

Y2 $115,000 $130,000

Y3 $140,000 $110,000

Y4 $150,000 $100,000

Y5 $145,000 $115,000

ABC reported two years on the face of the income statement during Y5.

Required: Use this information to answer the following questions.

1.What is beginning retained earnings calculated at 1/1/Y4?

2. What is beginning retained earnings at 1/1/Y4 after any adjustments?

3. What is corrected Y4 net income?

4. What is corrected Y5 net income?

5. What is ending retained earnings at 12/31/Y5?

Please answer in detail. thanks