Presented below are the comparative incomes and retained earnings statements for Blue Inc. for the years 2017 and 2018. 2018 2017 Sales $353,000 $276,000 Cost of sales 195,000 150,000 Gross profit 158,000 126,000 Expenses 89,600 49,100 Net income $68,400 $76,900 Retained earnings (Jan. 1) $121,500 $69,900 Net income 68,400 76,900 Dividends (30,800 ) (25,300 ) Retained earnings (Dec. 31) $159,100 $121,500 The following additional information is provided: 1. In 2018, Blue 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 2017 for $102,500 with an estimated useful life of 4 years and no salvage value. (The 2018 income statement contains depreciation expense of $30,750 on the assets purchased at the beginning of 2017.) 2. In 2018, the company discovered that the ending inventory for 2017 was overstated by $21,900; ending inventory for 2018 is correctly stated. Prepare the revised retained earnings statement for 2017 and 2018, assuming comparative statements. (Ignore income taxes.)
Presented below are the comparative incomes and
|
|
|
2018 |
|
2017 |
||
|
Sales |
|
$353,000 |
|
|
$276,000 |
|
|
Cost of sales |
|
195,000 |
|
|
150,000 |
|
|
Gross profit |
|
158,000 |
|
|
126,000 |
|
|
Expenses |
|
89,600 |
|
|
49,100 |
|
|
Net income |
|
$68,400 |
|
|
$76,900 |
|
|
Retained earnings (Jan. 1) |
|
$121,500 |
|
|
$69,900 |
|
|
Net income |
|
68,400 |
|
|
76,900 |
|
|
Dividends |
|
(30,800 |
) |
|
(25,300 |
) |
|
Retained earnings (Dec. 31) |
|
$159,100 |
|
|
$121,500 |
|
The following additional information is provided:
|
1. |
|
In 2018, Blue Inc. decided to switch its |
|
2. |
|
In 2018, the company discovered that the ending inventory for 2017 was overstated by $21,900; ending inventory for 2018 is correctly stated. |
Prepare the revised retained earnings statement for 2017 and 2018, assuming comparative statements. (Ignore income taxes.)
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