Question

At January 1, 2017, Crane Company reported retained earnings of $2,190,000. In 2017, Crane discovered that 2016 depreciation expense was understated by $382,000. In 2017, net income was $929,000 and dividends declared were $226,000. The tax rate is 35%. Prepare a 2017 retained earnings statement for Crane Company.

Answer 1

Solution and Explanation:

The retained earning statement for the company Crane for the year 2017 is as follows:

Martinez Company

Retained Earnings Statement

For the Year Ended December 31, 2017

Retained Earnings, January 1 $2,190,000

Less: Correction of Depreciation Error $382000

Retained Earnings, January 1, as adjusted $1,808000

Add: Net Income $929000

Less: Dividends $226000

Retained Earnings, December 31 $2,511000

Retained earnings at the starting year is to be considered and depreciation and dividend amount is to be deducted whereas the net income is to be added.