79.b)Assume Novak Corporation restricted retained earnings in the amount of $ on December 31, 2020. After this action, what would Novak report as total retained earnings in its December 31, 2020, balance sheet? Total retained earnings $ Novak Corporation began operations on January 1, 2022. During its first 3 years of operations, Novak reportednet income and declared dividends as follows.2022 $51,2002023Net income2024160,000204,800Dividends declared$-0-Effective tax rate64,00064,000The following information relates to 2025.Income before income taxPrior period adjustment: understatement of 2023 depreciation expense (before taxes)Dividends declared (of this amount, $32,000 will be paid on Jan. 15, 2026)$307,20032,000128,00020% Prepare a 2025 retained earnings statement for Novak Corporation. (List items that increase adjusted retained earnings first.)NOVAK CORPORATIONRetained Earnings Statement>>$LA

The statement of retained earnings help to track the changes in the balance of retained earnings. An…

2022 2023 2024 Net income $51,200 160,000 204,800 Dividends declared Income before income tax $-0- Effective tax rate 64,000 The following information relates to 2025. 64,000 Prior period adjustment: understatement of 2023 depreciation expense (before taxes) Dividends declared (of this amount, $32,000 will be paid on Jan. 15, 2026) $307,200 32,000 128,000 20%

2022 2023 2024 Net income $51,200 160,000 204,800 Dividends declared Income before income tax $-0- Effective tax rate 64,000 The following information relates to 2025. 64,000 Prior period adjustment: understatement of 2023 depreciation expense (before taxes) Dividends declared (of this amount, $32,000 will be paid on Jan. 15, 2026) $307,200 32,000 128,000 20%

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

79.

b)
Assume Novak Corporation restricted retained earnings in the amount of $ on December 31, 2020. After this action, what would Novak report as total retained earnings in its December 31, 2020, balance sheet? Total retained earnings $

Novak Corporation began operations on January 1, 2022. During its first 3 years of operations, Novak reported
net income and declared dividends as follows.
2022 $51,200
2023
Net income
2024
160,000
204,800
Dividends declared
$-0-
Effective tax rate
64,000
64,000
The following information relates to 2025.
Income before income tax
Prior period adjustment: understatement of 2023 depreciation expense (before taxes)
Dividends declared (of this amount, $32,000 will be paid on Jan. 15, 2026)
$307,200
32,000
128,000
20%

Prepare a 2025 retained earnings statement for Novak Corporation. (List items that increase adjusted retained earnings first.)
NOVAK CORPORATION
Retained Earnings Statement
>
>
$
LA

Definition Definition Remaining net income of the company after the required dividends are paid to shareholders. This surplus money is usually invested back into the business to expand its business operations or launch a new product.

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