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Central Avenue Company reported net income of P700,000 for the year 2021. The entity declared and paid dividends of P150,000 in 2021 and P300,000 in 2020. In the financial statements for the year ended December 31, 2020, the entity reported retained earnings of P1,500,000 on January 01, 2020. The net income for 2020 was P600,000. In 2021, after the 2020 financial statements were approved for issue, the entity discovered an error in the December 31, 2021 financial statements. The after-tax effect of the error was P420,000 understatement of net income for the year ended December 31, 2020 due to over-depreciation. What amount was reported as retained earnings on December 31, 2020? 1,200,000 1,800,000 1,500,000 2,400,000

Central Avenue Company reported net income of P700,000 for the year 2021. The entity declared and paid dividends of P150,000 in 2021 and P300,000 in 2020. In the financial statements for the year ended December 31, 2020, the entity reported retained earnings of P1,500,000 on January 01, 2020. The net income for 2020 was P600,000. In 2021, after the 2020 financial statements were approved for issue, the entity discovered an error in the December 31, 2021 financial statements. The after-tax effect of the error was P420,000 understatement of net income for the year ended December 31, 2020 due to over-depreciation. What amount was reported as retained earnings on December 31, 2020? 1,200,000 1,800,000 1,500,000 2,400,000

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter5: The Income Statement And The Statement Of Cash Flows
Section: Chapter Questions
Problem 11P: Net Income and Comprehensive Income At the beginning of 2019, JR Companys shareholders equity was as...
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Central Avenue Company reported net income of P700,000 for the year 2021. The entity declared and paid dividends of P150,000 in 2021 and P300,000 in 2020. In the financial statements for the year ended December 31, 2020, the entity reported retained earnings of P1,500,000 on January 01, 2020. The net income for 2020 was P600,000. In 2021, after the 2020 financial statements were approved for issue, the entity discovered an error in the December 31, 2021 financial statements. The after-tax effect of the error was P420,000 understatement of net income for the year ended December 31, 2020 due to over-depreciation.

What amount was reported as retained earnings on December 31, 2020?

  1. 1,200,000
  2. 1,800,000
  3. 1,500,000
  4. 2,400,000
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