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Prior-period adjustments are reported on the income statement for the period in which it

 Prior-period adjustments are reported on the income statement for the period in which it is discovered an adjustment is necessary.

22) Corrections to the beginning balance of Retained Earnings for errors found within the current period are called prior-period adjustments.

23) Prior-period adjustments are made when an error occurs in one period and it is corrected in a later period.

24) The following statement of shareholders' equity for the Q8 Corporation is missing explanations of the events that led to the changes in the shareholders' equity accounts. Write a brief explanation for each change.

 

Common shares

Contributed surplus

Retained Earnings

Accumulated Other Comprehensive Income

Balance

Balance

$190,000

$0

$65,000

 

$255,000

a.

74,000

 

 

 

74,000

b.

 

 

86,500

 

86,500

c.

 

 

(12,800)

 

(12,800)

d.

30,000

 

(30,000)

 

-0-

e.

(5,000)

2,000

 

 

(3,000)

f.

 

 

 

3,000

3,000

Balance

$289,000

$2,000

$108,700

$3,000

$402,700

 

25) Q8 Inc. reported retained earnings of $950,000 on December 31, 2010. During 2011, Q8 Inc. declared and paid $50,000 in dividends to preferred shareholders and $24,000 in dividends to common shareholders. Net income for 2011 was $106,000. A prior-period adjustment was recorded, resulting in a charge against retained earnings of $36,000.

Prepare a statement of retained earnings for Q8 Inc. for 2011.

26) Given the following information prepare a Statement of Shareholders' Equity for Q8 Inc for 2011.

Common Shares Balance December 31, 201                      $22,000  (2,200 shares outstanding)

Net Income 201115,350

Discontinued operations5,700

New shares issued May 1, 2011 12,500

Share dividend issued September 30, 2011 8,500

Repurchase of common shares March 30, 2011                     1,800  (200 shares)

Cash dividends November 30, 2011 1,500

Dec 09 2019 View more View Less

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