LEE Company had the following amounts in the shareholders’ equity on January 1, 2020: Preference share capital, P150 par value, 20,000 shares – P3,000,000; Ordinary share capital, P50 par value, 100,000 shares – P 5,000,000; Share premium – P6,000,000; Accumulated profits – P 4,500,000. On January 1, 2020, the company sold 20,000 additional ordinary shares for P90 per share. It was found out that there was an overstatement of the depreciation expense of 2019 amounting to P500,000 due to a mathematical error. LEE Company reported a net income for 2020 of P4,000,000 and declared a cash dividend of P1,000,000 on preference shares and P2,000,000 on ordinary shares. The income tax rate is 30%. What amount of accumulated profits should be reported on December 31, 2020?
LEE Company had the following amounts in the shareholders’ equity on January 1, 2020:
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