Question

8 points eBook HintPrintReferences Check my work Check My Work button is now enabledItem 4Item 4 8 points The following information is from Amos Company for the year ended December 31, 2019. Retained earnings at December 31, 2018 (before discovery of error), $852,000. Cash dividends declared and paid during the year, $13,000. Two years ago, it forgot to record depreciation expense of $44,600 (net of tax benefit). The company earned $219,000 in net income this year. Prepare a statement of retained earnings for Amos Company. (Amounts to be deducted should be indicated with a minus sign.)

Answer 1

Answer:

Amos Company

Statement of Retained Earnings for the year ended December 31, 2019:

December 31, 2018 balance             $852,000

adjustment of error:

Depreciation expense for 2017           -44,600

Adjusted Retained Earnings             $807,400

Income for the year                             219,000

less Dividends                                      -13,000

Retained Earnings, Dec. 31, 2019  $1,013,400

Explanation:

The depreciation expense of $44,600 would be recorded by deducting it from the beginning retained earnings.  This adjusts the balance to reflect the previous year's errors.  Then the year's earnings are added before the payment of dividends.  The resultant figure is the retained earnings to be carried to the next accounting period.