8. Cerritos Corporation began operations on January 1, 2017. During its first three years of operations, Cerritos reported net income and declared dividends as follows: Net incomeDividends declared2017P 80,000P 02018250,000100,0002019300,000100,000 The following information related to 2020:Prior period adjustment: understatement of 2018 depreciation expense (before taxes)P 40,000Cumulative decrease in income from change in inventory methods (before taxes)70,000Income before income tax480,000Dividends declared (of this amount, P50,000 will be paid on January 15, 2021)200,000Effective tax rate35% As at December 31, 2020, the retained earnings of Cerritos Corporation is Group of answer choice520,500484,500430,000470,500

Retained earnings refers to that portion of the after-tax profit of the company which the company…

Answered: As at December 31, 2020, the retained…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Cerritos Corporation began operations on January 1, 2017. During its first three years of operations, Cerritos reported net income and declared dividends as follows:

	Net income	Dividends declared
2017	P 80,000	P 0
2018	250,000	100,000
2019	300,000	100,000

The following information related to 2020:

Prior period adjustment: understatement of 2018 depreciation expense (before taxes)	P 40,000
Cumulative decrease in income from change in inventory methods (before taxes)	70,000
Income before income tax	480,000
Dividends declared (of this amount, P50,000 will be paid on January 15, 2021)	200,000
Effective tax rate	35%

As at December 31, 2020, the retained earnings of Cerritos Corporation is

Group of answer choice

520,500

484,500

430,000

470,500

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