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Prepare the revised retained earnings statement for 2025 and 2026, assuming comparative statements. (Ignore income taxes.)

Prepare the revised retained earnings statement for 2025 and 2026, 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 Sunland Inc. for the years 2025 and 2026. 2026 2025 Sales $358,000 $289,000 Cost of sales 213,000 147,000 Gross profit 145,000 142,000 Expenses 81,800 49,400 Net income $63,200 $92,600 Retained earnings (Jan. 1) $132,400 $66,400 Net income 63,200 92,600 Dividends (29,400) (26,600) Retained earnings (Dec. 31) $166,200 $132,400 The following additional information is provided: 1. 2. In 2026, Sunland 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 2025 for $107,000 with an estimated useful life of 4 years and no salvage value. (The 2026 income statement contains depreciation expense of $32,100 on the assets purchased at the beginning of 2025.) In 2026, the company discovered that the ending inventory for 2025 was overstated by $21,800; ending inventory for 2026 is correctly stated. Prepare the revised retained earnings statement for 2025 and 2026, assuming comparative statements. (Ignore income taxes.) su
Transcribed Image Text:Presented below are the comparative income and retained earnings statements for Sunland Inc. for the years 2025 and 2026. 2026 2025 Sales $358,000 $289,000 Cost of sales 213,000 147,000 Gross profit 145,000 142,000 Expenses 81,800 49,400 Net income $63,200 $92,600 Retained earnings (Jan. 1) $132,400 $66,400 Net income 63,200 92,600 Dividends (29,400) (26,600) Retained earnings (Dec. 31) $166,200 $132,400 The following additional information is provided: 1. 2. In 2026, Sunland 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 2025 for $107,000 with an estimated useful life of 4 years and no salvage value. (The 2026 income statement contains depreciation expense of $32,100 on the assets purchased at the beginning of 2025.) In 2026, the company discovered that the ending inventory for 2025 was overstated by $21,800; ending inventory for 2026 is correctly stated. Prepare the revised retained earnings statement for 2025 and 2026, assuming comparative statements. (Ignore income taxes.) su
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