Question
The Retained Earnings account of Merry Exams Morty Company shows the following debits and credits for the year 2020: RETAINED EARNINGS Date Description Debit Credit
The Retained Earnings account of Merry Exams Morty Company shows the following debits and credits for the year 2020:
RETAINED EARNINGS | ||||
Date | Description | Debit | Credit | Balance |
Jan. 1 | Balance | 726,400 | ||
a) | Loss from fire | 5,250 | 721,150 | |
b) | Write-off of goodwill | 52,500 | 668,650 | |
c) | Stock dividends distributed | 140,000 | 528,650 | |
d) | Loss on sale of equipment | 48,300 | 480,350 | |
e) | Officers’ compensation related to the income of prior periods – accrual overlooked | 325,500 | 154,850 | |
f) | Loss on retirement of preferred shares at more than issue price | 70,000 | 84,850 | |
g) | Paid in capital in excess of par | 129,500 | 214,350 | |
h) | Stock issuance expenses (related to letter g) | 10,000 | 204,350 | |
i) | Stock subscriptions defaults | 8,470 | 212,820 | |
j) | Gain on retirement of preferred stock at less than issue price | 25,900 | 238,720 | |
k) | Gain on early retirement of bonds | 15,050 | 253,770 | |
l) | Gain on life insurance policy settlement | 10,500 | 264,270 | |
m) | Correction of prior period error | 50,050 | 314,320 | |
n) | Effect of change in accounting policy – from FIFO to weighted average | 100,000 | 414,320 | |
o) | Dividends payable | 25,000 | 389,320 | |
p) | Loss on sale of treasury stock | 20,000 | 369,320 | |
q) | Proceeds from sale of donated stock | 40,000 | 409,320 | |
r) | Appraisal increase in land | 250,000 | 659,320 | |
s) | Appropriated for property acquisition | 100,000 | 559,320 |
The entry to correct the Retained Earnings account will include:
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