Question

Leonard Corporation reports:

Correction of overstatement of depreciation expense: $430,000
Dividends declared: $320,000
Net income: $1,000,000
Retained earnings, 1/1/14, as reported: $4,000,000

What should Leonard report as the adjusted retained earnings as of 1/1/14?

A. $3,570,000
B. $4,000,000
C. $4,430,000
D. $5,110,000

Answer 1

The adjusted retained earnings for Leonard Corporation as of 1/1/14 should be $4,430,000, reflecting the correction of the overstatement of depreciation expenses added to the originally reported retained earnings.

Step-by-step explanation:

The student asked what Leonard Corporation should report as the adjusted retained earnings as of 1/1/14 after correcting an overstatement of depreciation expense. The original retained earnings were reported as $4,000,000. However, due to the correction of the overstatement of depreciation expense by $430,000, the adjusted retained earnings would be $4,430,000 ($4,000,000 + $430,000 correction).