Do not give answer in image Presented below are the comparative income and retained earnings statements for Buffalo Inc. for the years 2017 and 2018.SalesCost of SalesGross ProfitExpensesNet IncomeRetained Earnings (Jan. 1)Net IncomeDividendsRetained Earnings (Dec. 31)2018$195,00077,000118,00063,000$55,000$127,00055,0002017$158,000$173,00070,000103,00061,000$42,000$107,00042,000(24,000) (22,000)$127,0001. In 2018, Buffalo Inc. decided to switch its depreciation method from double-declining balance to the straight-line method. Thedepreciable assets were purchased at the beginning of 2017 for $51,000 with an estimated useful life of 5 years and no salvage value. The2018 income statement above contains depreciation expense of $12,240 on these assets.2. In 2018, the company discovered that the ending inventory for 2017 was understated by $9,100; ending inventory for 2018 is correctlystated. Prepare the revised retained earnings statement for 2017 and 2018, assuming comparative statements.:BUFFALO INC.Retained Earnings StatementFor the Year Ended+$2018$2017TIL

Net income201742000 - 910032,900201855,000+9100+51064,610Depreciation over chargedCost$51,000Less:-…

Answered: Prepare the revised retained earnings…

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Prepare the revised retained earnings statement for 2017 and 2018, assuming comparative statements.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 55CE

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Question

Do not give answer in image

Presented below are the comparative income and retained earnings statements for Buffalo Inc. for the years 2017 and 2018.
Sales
Cost of Sales
Gross Profit
Expenses
Net Income
Retained Earnings (Jan. 1)
Net Income
Dividends
Retained Earnings (Dec. 31)
2018
$195,000
77,000
118,000
63,000
$55,000
$127,000
55,000
2017
$158,000
$173,000
70,000
103,000
61,000
$42,000
$107,000
42,000
(24,000) (22,000)
$127,000
1. In 2018, Buffalo Inc. decided to switch its depreciation method from double-declining balance to the straight-line method. The
depreciable assets were purchased at the beginning of 2017 for $51,000 with an estimated useful life of 5 years and no salvage value. The
2018 income statement above contains depreciation expense of $12,240 on these assets.
2. In 2018, the company discovered that the ending inventory for 2017 was understated by $9,100; ending inventory for 2018 is correctly
stated.

Prepare the revised retained earnings statement for 2017 and 2018, assuming comparative statements.
:
BUFFALO INC.
Retained Earnings Statement
For the Year Ended
+
$
2018
$
2017
TIL

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