Question

Bonita Corporation has retained earnings of $679.700 at January 1, 2020. Net income during 2020 was $1,641,700, and cash dividends declared and paid during 2020 totaled $81.700. Prepare a retained earnings statement for the year ended December 31. 2020. Assume an error was discovered: land costing $86,300 (net of tax) was charged to maintenance and repairs expense in 2019.

Answer 1

To prepare the retained earnings statement for Bonita Corporation for the year ended December 31, 2020, we would calculate the ending retained earnings by adding the net income, subtracting the dividends, and subtracting the adjustments.

Step-by-step explanation:

To prepare the retained earnings statement for Bonita Corporation for the year ended December 31, 2020, we need to consider the beginning retained earnings, net income, dividends declared and paid, and the error discovered.

1. The beginning retained earnings at January 1, 2020, were $679,700.
2. The net income during 2020 was $1,641,700.
3. The cash dividends declared and paid during 2020 were $81,700.
4. The error discovered in 2020 was a land costing $86,300 (net of tax) that was charged to maintenance and repairs expense in 2019.

Based on this information, the retained earnings statement for Bonita Corporation for the year ended December 31, 2020 would look like this:

Beginning Retained Earnings$679,700Add: Net Income$1,641,700Less: Dividends$81,700Less: Adjustments$86,300

To calculate the ending retained earnings, we can add the net income, subtract the dividends, and subtract the adjustments:
$679,700 + $1,641,700 - $81,700 - $86,300 = $2,153,400

Therefore, the ending retained earnings for Bonita Corporation for the year ended December 31, 2020 would be $2,153,400.