Retained Earnings, January 1, 2020

3,000

Increase in net income for 2020 due to change in estimate of

uncollectible accounts from 3% to 2%. (before tax)

50

Net income for 2020

600

Dividends declared on preferred stock

300

Dividends declared on common stock

200

Income tax rate

30%

Number of common shares authorized, issued and outstanding

100

Cumulative decrease in net income from change of

inventory methods (before taxes)

420

Prior period adjustment: overstatement of depreciation

expense for 2019 (before taxes)

250

Decrease in net income for 2019 due to change in estimated

80

life of plant assets during 2019 (before tax)

INSTRUCTIONS:

Prepare a retained earnings statement for the year ended December 31, 2020.