In 20X6, Dalia Corp., a calendar fiscal-year company, discovered that depreciation expense was erroneously overstated $68,000 in both 20X4 and 20X5 for financial reporting purposes. Net income in 20X6 is correct. The tax rate is 35%. The error was made only for financial reporting, affecting depreciation and deferred income tax accounts. CCA had been recorded correctly, and thus there will be no change in taxes payable. Additional information: Z0X6 Beginning retained earnings $456,000 zexs $432,500 Earnings (includes error in 20x5) Dividends declared 85,800 62,500 96,400 72,900 Required: 1. Record the entry in 20X6 to correct the error. (If no entry is required for a transaction/event, select "No Journal entry required" In the first account field.) Answer is not complete. General Journal Debit Credit 136,000 23,800x 112,200x No 1 Date 20X6 Deferred income tax liability Retained earnings, error correction 2. Prepare the comparative retained earnings section of the statement of changes in shareholders' equity for 20X5, reflecting the change. Answer is complete but not entirely correct. DALIA CORPORATION Retained Earnings Statement For the Year Ended 31 December Beginning retained eamings, as previously reported Error correction, depreciation, net and tax. Beginning balance restated Earnings (restated for 20X5) Dividends declared Ending balance 20X6 20X5 S 456,000 S 432,500 23,800x 44,200 S 479,800 S 476,700 85,800 (62,600) 112.200 72,900 S 503,100 S 516,000
In 20X6, Dalia Corp., a calendar fiscal-year company, discovered that depreciation expense was erroneously overstated $68,000 in both 20X4 and 20X5 for financial reporting purposes. Net income in 20X6 is correct. The tax rate is 35%. The error was made only for financial reporting, affecting depreciation and deferred income tax accounts. CCA had been recorded correctly, and thus there will be no change in taxes payable. Additional information: Z0X6 Beginning retained earnings $456,000 zexs $432,500 Earnings (includes error in 20x5) Dividends declared 85,800 62,500 96,400 72,900 Required: 1. Record the entry in 20X6 to correct the error. (If no entry is required for a transaction/event, select "No Journal entry required" In the first account field.) Answer is not complete. General Journal Debit Credit 136,000 23,800x 112,200x No 1 Date 20X6 Deferred income tax liability Retained earnings, error correction 2. Prepare the comparative retained earnings section of the statement of changes in shareholders' equity for 20X5, reflecting the change. Answer is complete but not entirely correct. DALIA CORPORATION Retained Earnings Statement For the Year Ended 31 December Beginning retained eamings, as previously reported Error correction, depreciation, net and tax. Beginning balance restated Earnings (restated for 20X5) Dividends declared Ending balance 20X6 20X5 S 456,000 S 432,500 23,800x 44,200 S 479,800 S 476,700 85,800 (62,600) 112.200 72,900 S 503,100 S 516,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:In 20X6, Dalia Corp., a calendar fiscal-year company, discovered that depreciation expense was erroneously overstated $68,000 in
both 20X4 and 20X5 for financial reporting purposes. Net income in 20X6 is correct. The tax rate is 35%. The error was made only for
financial reporting, affecting depreciation and deferred income tax accounts. CCA had been recorded correctly, and thus there will be
no change in taxes payable.
Additional information:
Z0X6
Beginning retained earnings
$456,000
zexs
$432,500
Earnings (includes error in 20x5)
Dividends declared
85,800
62,500
96,400
72,900
Required:
1. Record the entry in 20X6 to correct the error. (If no entry is required for a transaction/event, select "No Journal entry required" In
the first account field.)
Answer is not complete.
General Journal
Debit
Credit
136,000
23,800x
112,200x
No
1
Date
20X6
Deferred income tax liability
Retained earnings, error correction
2. Prepare the comparative retained earnings section of the statement of changes in shareholders' equity for 20X5, reflecting the
change.
Answer is complete but not entirely correct.
DALIA CORPORATION
Retained Earnings Statement
For the Year Ended 31 December
Beginning retained eamings, as previously reported
Error correction, depreciation, net and tax.
Beginning balance restated
Earnings (restated for 20X5)
Dividends declared
Ending balance
20X6
20X5
S 456,000 S 432,500
23,800x
44,200
S 479,800 S 476,700
85,800
(62,600)
112.200
72,900
S 503,100 S
516,000
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