Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following information is available for Reynolds Corporation: Retained Earnings, December 31, 2020 $1,500,000 Profit for the year ended December 31, 2021 250,000 The company

The following information is available for Reynolds Corporation:

Retained Earnings, December 31, 2020 $1,500,000
Profit for the year ended December 31, 2021 250,000

The company accountant, in preparing financial statements for the year ending December 31, 2021, has discovered the following information: The company's previous bookkeeper, who has been fired, had recorded depreciation expense on a machine in 2019 and 2020 using the double diminishing-balance method of depreciation. The bookkeeper neglected to use the straight-line method of depreciation which is the company's policy. The cumulative effect of the error on prior years was $9,000. Depreciation was calculated by the straight-line method in 2021. Reynolds' average tax rate is 22%. During 2021, Reynolds declared and paid cash dividends of $80,000. Instructions

a) Calculate the impact on retained earnings.
b)Prepare the statement of retained earnings for 2021.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Analysing Financial Performance Using Integrated Ratio Analysis

Authors: Nic La Rosa

1st Edition

0367552523, 978-0367552527

More Books

Students also viewed these Accounting questions

Question

Write down the Limitation of Beer - Lamberts law?

Answered: 1 week ago

Question

Discuss the Hawthorne experiments in detail

Answered: 1 week ago

Question

Explain the characteristics of a good system of control

Answered: 1 week ago

Question

State the importance of control

Answered: 1 week ago