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Prepare the revised retained earnings statement for 2020 and 2021, assuming comparative statements. (Ignore income taxes.)

Prepare the revised retained earnings statement for 2020 and 2021, assuming comparative statements. (Ignore income taxes.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Presented below are the comparative income and retained earnings statements for Flounder Inc. for the years 2020 and 2021. Sales Cost of sales Gross profit Expenses Net income Retained earnings (Jan. 1) Net income Dividends Retained earnings (Dec. 31) 1. 2. 2021 $353,000 195,000 158,000 The following additional information is provided: 89,600 4: $68,400 $121,500 68,400 (30,800 ) Net Income $159,100 2020 $276,000 150,000 126,000 49,100 $76,900 $69,900 76,900 (25,300 ) In 2021, Flounder Inc. decided to switch its depreciation method from sum-of-the-years' digits to the straight- line method. The assets were purchased at the beginning of 2020 for $102,500 with an estimated useful life of 4 years and no salvage value. (The 2021 income statement contains depreciation expense of $30,750 on the assets purchased at the beginning of 2020.) $121,500 In 2021, the company discovered that the ending inventory for 2020 was overstated by $21,900; ending inventory for 2021 is correctly stated. Prepare the revised retained earnings statement for 2020 and 2021, assuming comparative statements. (Ignore income taxes.) *: Correction of Error for Inventory Overstatement FLOUNDER INC. Retained Earnings Statement For the Year Ended + $ 2021 $
Transcribed Image Text:Presented below are the comparative income and retained earnings statements for Flounder Inc. for the years 2020 and 2021. Sales Cost of sales Gross profit Expenses Net income Retained earnings (Jan. 1) Net income Dividends Retained earnings (Dec. 31) 1. 2. 2021 $353,000 195,000 158,000 The following additional information is provided: 89,600 4: $68,400 $121,500 68,400 (30,800 ) Net Income $159,100 2020 $276,000 150,000 126,000 49,100 $76,900 $69,900 76,900 (25,300 ) In 2021, Flounder Inc. decided to switch its depreciation method from sum-of-the-years' digits to the straight- line method. The assets were purchased at the beginning of 2020 for $102,500 with an estimated useful life of 4 years and no salvage value. (The 2021 income statement contains depreciation expense of $30,750 on the assets purchased at the beginning of 2020.) $121,500 In 2021, the company discovered that the ending inventory for 2020 was overstated by $21,900; ending inventory for 2021 is correctly stated. Prepare the revised retained earnings statement for 2020 and 2021, assuming comparative statements. (Ignore income taxes.) *: Correction of Error for Inventory Overstatement FLOUNDER INC. Retained Earnings Statement For the Year Ended + $ 2021 $
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