Question

The following information is from Amos Company for the current year ended December 31.

-Retained earnings at December 31 of the prior year (before discovery of an error) was $865,000.
-Amos discovered this year that it forgot to record depreciation expense of $38,600 (net of tax benefit) two years ago.
-Cash dividends declared and paid in the current year were $14,000.
-Reported $205,000 of net income in the current year.
Prepare a statement of retained earnings for Amos Company for the current year.

Answer 1

To prepare the statement of retained earnings for Amos Company, we need to calculate the beginning retained earnings, add net income, subtract dividends, and adjust for any prior period adjustments. The ending retained earnings for the current year is $1,094,600.

Step-by-step explanation:

To prepare the statement of retained earnings for Amos Company, we need to calculate the beginning retained earnings, add net income, subtract dividends, and adjust for any prior period adjustments.

1. Beginning Retained Earnings = $865,000
2. Add Net Income = $205,000
3. Subtract Dividends = $14,000
4. Add Depreciation Error Adjustment = $38,600
5. The statement of retained earnings for Amos Company for the current year is:

Statement of Retained Earnings

Beginning Retained Earnings$865,000Add: Net Income$205,000Subtract: Dividends$14,000Add: Depreciation Error Adjustment$38,600Ending Retained Earnings$1,094,600