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McEntire Corporation began operations on January 1 2009 During its first 3 years of operations, McEntire reported net income and declared dividends as follows Net income Dividends declared

McEntire Corporation began operations on January 1, 2009. During its first 3 years of operations, McEntire reported net income and declared dividends as follows.

    Net income Dividends declared
  2009 $47,900 $    -0-   
  2010 132,700 53,200
  2011 162,700 57,500

The following information relates to 2012.

  Income before income tax $243,500
  Prior period adjustment: understatement of 2010 depreciation expense (before taxes) $25,200
  Cumulative decrease in income from change in inventory methods (before taxes) $41,800
  Dividends declared (of this amount, $25,000 will be paid on Jan. 15, 2013) $100,000
  Effective tax rate 40%   
(a)

Prepare a 2012 retained earnings statement for McEntire Corporation. (Enter all amounts as positive amounts and subtract where necessary.)

(b) Assume McEntire Corp. restricted retained earnings in the amount of $70,000 on December 31, 2012. After this action, what would McEntire report as total retained earnings in its December 31, 2012, balance sheet?

Jun 19 2020 View more View Less

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