Retained earnings statement prior period adjustment below, Ask an Expert

Accounting

(Retained Earnings Statement, Prior Period Adjustment) Below is the Retained Earnings account for the year 2012 for Acadian Corp.

Retained earnings, January 1, 2012 $257,600
Add:

Gain on sale of investments (net of tax) $41,200
Net income 84,500
Refund on litigation with government, related to the year 2009 (net of tax) 21,600
Recognition of income earned in 2011, but omitted from income statement in that year (net of tax) 25,400 172,700 430,300

Deduct:

Loss on discontinued operations (net of tax) 35,000
Write-off of goodwill (net of tax) 60,000
Cumulative effect on income of prior years in changing from LIFO to FIFO
inventory valuation in 2012 (net of tax) 23,200
Cash dividends declared 32,000 150,200
Retained earnings, December 31, 2012 $280,100

Instructions

(a) Prepare a corrected retained earnings statement. Acadian Corp. normally sells investments of the type mentioned above. FIFO inventory was used in 2012 to compute net income.

(b) State where the items that do not appear in the corrected retained earnings statement should be shown.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9976200

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