(Retained Earnings Statement) McEntire Corporation began operations on January 1, 2009 During its first 3 years of operations, McEntire reported net income and declared dividends as follows Net income Dividends declared 2009 $47,900 $ 0 2010 132,700 53,200 2011 162,700 57,500 The following information relates to 2012 Income before income tax $243,500 Prior period adjustment understatement of 2010 depreciation expense (before taxes) $25,200 Cumulative decrease in income from change in inventory methods (before taxes) $41,800 Dividends declared (of this amount, $25,000 will be paid on Jan 15, 2013) $100,000 Effective tax rate 40 (a) Prepare a 2012 retained earnings statement for McEntire Corporation (Enter all amounts as positive amounts and subtract where necessary ) (b) Assume McEntire Corp restricted retained earnings in the amount of $70,000 on December 31, 2012 After this action, what would McEntire report as total retained earnings in its December 31, 2012, balance sheet

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Aug 27, 2024

(Retained Earnings Statement) McEntire Corporation began operations on January 1, 2009. During its first 3 years of operations, McEntire reported net income and declared dividends

(Retained Earnings Statement)

McEntire Corporation began operations on January 1, 2009. During its first 3 years of operations, McEntire reported net income and declared dividends as follows.

	Net income	Dividends declared
2009	$47,900	$ -0-
2010	132,700	53,200
2011	162,700	57,500

The following information relates to 2012.

	Income before income tax	$243,500
	Prior period adjustment: understatement of 2010 depreciation expense (before taxes)	$25,200
	Cumulative decrease in income from change in inventory methods (before taxes)	$41,800
	Dividends declared (of this amount, $25,000 will be paid on Jan. 15, 2013)	$100,000
	Effective tax rate	40%

(a)

Prepare a 2012 retained earnings statement for McEntire Corporation. (Enter all amounts as positive amounts and subtract where necessary.)

(b)

Assume McEntire Corp. restricted retained earnings in the amount of $70,000 on December 31, 2012. After this action, what would McEntire report as total retained earnings in its December 31, 2012, balance sheet?