Tuscan Incorporated had a retained earnings balance of $86,000 at December 31, 2019. During the year, Tuscan had the following selected transactions. • Reported net income of $126,000. • Revised an estimate of a machine's salvage value. Depreciation increased by $3,600 per year. • An error was discovered. Three years ago, a purchase of a building was incorrectly expensed. The effect is understated retained earnings of $38,000 (net of tax benefit). • Paid cash dividends of $59,000. Calculate the retained earnings balance at December 31, 2020. Note: Amounts to be deducted should be indicated with a minus sign. }

Tuscan Incorporated had a retained earnings balance of $86,000 at December 31, 2019. During the year, Tuscan had the following selected transactions. • Reported net income of $126,000. • Revised an estimate of a machine's salvage value. Depreciation increased by $3,600 per year. • An error was discovered. Three years ago, a purchase of a building was incorrectly expensed. The effect is understated retained earnings of $38,000 (net of tax benefit). • Paid cash dividends of $59,000. Calculate the retained earnings balance at December 31, 2020. Note: Amounts to be deducted should be indicated with a minus sign. }

Name: Tuscan Incorporated had a retained earnings balance of $86,000 at Dec
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: Tuscan Incorporated had a retained earnings balance of $86,000 at December 31, 2019. During the year, Tuscan had the followingselected transactions.• Reported net income of $126,000.• Revised an estimate of a machine's salvage value. Depreciation in

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Swifty Corporation uses the straight-line method of depreciation. The company's fiscal year end is…

A: Sales tax and shipping cost will be capitalise to equipment. Cost of equipment will be…

Q: At the beginning of the current year, Andy Company has equipment that originally cost $70,000, has…

A: Introduction: Journals: Recording of a business transactions in a chronological order. First step in…

Q: Required: 1. Prepare the journal entry to record the purchase. 2. Prepare the year end adjusting…

A: Elimination Method: Under this method, we eliminate accumulated deprecation from Machine A/c and…

Q: Sandhill Corporation uses straight-line depreciation, prepares adjusting entries annually, and has a…

A: The impairment loss is calculated as difference between the book value of an asset and fair value of…

Q: Concord Cole Inc. acquired the following assets in January of 2018. Equipment, estimated service…

A: Journal entry is a process of recording and classifying business transactions into books of accounts…

Q: ent has been depreciated using the sum-of-the-years"e company decided to change the method of…

A: Equipment : Sum of year digit = 5+4+3+2+1 = 15Accumulated depreciation 2018 to 2021 =…

Q: On July 1, 2021, Rodger Construction Co. bought a new concrete mixer. The mixer cost $54,000. The…

A: Depreciation is a non-cash expense that can applicable on fixed assets. Depreciation reduces the…

Q: O’Keefe Advertising Company reported the following on its December 31, 2012 balance sheet:…

A: The depreciation expense under the straight-line method is $45,000.

Q: On July 1, 2014, Nowton Co. purchased machinery for $168,000. Salvage value was estimated to be…

A: The depreciation expense is charged on the fixed assets as reduction in the value of the fixed…

Q: On July 1, 2019, Blossom Company purchased new equipment for $70,000. Its estimated useful life was…

A: Depreciation expense: Depreciation expense is a non-cash expense, which is recorded on the income…

Q: Wildhorse Company uses the straight-line method of depreciation. The company's fiscal year end is…

A: Journal Entries - Journal Entries are the recording of transactions of the organization. It is…

Q: Assume you are the Chief Accounting Officer for Mississippi Cookie Company and you are currently…

A: Depreciation refers to the decrease in value of an asset over time due to wear and tear, aging, or…

Q: Whispering Cole Inc. acquired the following assets in January of 2018. Equipment, estimated…

A: Answer a) Journal Entry Year end Account Titles and Explanation Debit Credit 2021 Depreciation…

Q: buring the first month of its current fiscal year, Green Co. Incurred repair costs of $21,000 on a…

A: Green Co. incurred repair costs of $21,000 on a machine that had four years of remaining depreciable…

Q: Holmes Pty Ltd acquired a machine from its parent company for $500,000 on 1 January this year. The…

A: Depreciation = $ 300,000×181365×100%5 = $ 29,753

Q: On January 1, the company purchased equipment that cost $10,000. The equipment is expected to be…

A: Depreciation expense is the non-cash expense which is reported in the books to report the regular…

Q: am.111.

A: The objective of the question is to record the adjusting entries for the transactions that occurred…

Q: SEAT Inc. acquired the following assets in January of 2015. Equipment, estimated service…

A: An accounting technique called depreciation is used to distribute an asset's cost over the course of…

Q: In 2021, it was discovered that a company had debited expense for the full cost of an asset…

A: Depreciation:Depreciation refers to the continuous reduction in the depreciable value of depreciable…

Q: Equipment, estimated service life, 5 years; salvage value, $14,600 Building, estimated service life,…

A: A journal entry is a basic accounting record that is used to chronologically track financial…

Q: Rifhan products use straight-line depreciation on all its depreciable assets. The accounts are…

A: Since there are multi questions, we are going to solve only first three for you. To get the…

Q: On January 1, 2025, a corporation acquired equipment for $160,000 Residual value was estimated to be…

A: The depreciation expense is charged on fixed assets as the reduction in the value of the fixed…

Q: a. Prepare journal entries in chronological order for the given events, beginning with the purchase…

A: Given in the question: Date of Purchase of Machine = January 11, 2017 Machine Cost = $117,000 Useful…

Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

Topic Video

Question

Tuscan Incorporated had a retained earnings balance of $86,000 at December 31, 2019. During the year, Tuscan had the following
selected transactions.
• Reported net income of $126,000.
• Revised an estimate of a machine's salvage value. Depreciation increased by $3,600 per year.
• An error was discovered. Three years ago, a purchase of a building was incorrectly expensed. The effect is understated retained
earnings of $38,000 (net of tax benefit).
• Paid cash dividends of $59,000.
Calculate the retained earnings balance at December 31, 2020.
Note: Amounts to be deducted should be indicated with a minus sign.
Answer is not complete.
TUSCAN INCORPORATED
Statement of Retained Earnings
For Year Ended December 31, 2020
Retained earnings, December 31, 201 as previously reported
Prior period adjustment
Retained earnings, December 31, 2020
Retained earnings, December 31, 2019, as adjusted
Add: Net income
Add: Cash dividends
Building cost incorrectly expensed (net of tax)
X
✓
126,000 x
126,000
X
× $ 126,000
}

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

On January 1, Year 2, Webb Construction Company overhauled four cranes resulting in a slight increase in the life of the cranes. Such overhauls occur regularly at two-year intervals and have been treated as maintenance expense in the past. Management is considering whether to capitalize this year's $28,310 cash cost expense. Assume that the cranes have a remaining useful life of two years and no expected salvage value. Assume straight-line depreciation. the Cranes asset account or to expense it as a maintenance Required a. Determine the amount of additional depreciation expense Webb would recognize in Year 2 and Year 3 if the cost were capitalized in the Cranes account. b. Determine the amount of expense Webb would recognize in Year 2 and Year 3 if the cost were recognized as maintenance expense. c. Determine the effect of the overhaul on cash flow from operating activities for Year 2 and Year 3 if the cost were capitalized and expensed through depreciation charges. (Cash outflows…
Martinez Company owns a building that appears on its prior year-end balance sheet at its original $572,000 cost less $429,000 accumulated depreciation. The building is depreciated on a straight-line basis assuming a 20-year life and no salvage value. During the first week in January of the current calendar year, major structural repairs are completed on the building at a $68,350 cost. The repairs extend its useful life for 5 years beyond the 20 years originally estimated. 1. Determine the building's age (plant asset age) as of the prior year-end balance sheet date. 2. Prepare the entry to record the cost of the structural repairs that are paid in cash. 3. Determine the book value of the building immediately after the repairs are recorded. 4. Prepare the entry to record the current calendar year's depreciation. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Determine the building's age (plant asset age) as of the prior…
Wiater Company operates a small manufacturing facility. On January 1, 2021, an asset account for the company showed the following balances: Equipment Accumulated Depreciation (beginning of the year) $ 344,000 212,000 During the first week of January 2021, the following cash expenditures were incurred for repairs and maintenance: Routine maintenance and repairs on the equipment Major overhaul of the equipment that improved efficiency $ 3,550 41,000 The equipment is being depreciated on a straight-line basis over an estimated life of 15 years with a $26,000 estimated residual value. The annual accounting period ends on December 31. Required: - Indicate the effects (accounts, amounts, and + for increase and – for decrease) of the following two items on the accounting equation, using the headings shown below. (Enter any decreases to Assets, Liabilities or Stockholder's Equity with a minus sign.) 1. The adjustment for depreciation made last year at the end of 2020. 2. The two expenditures…
34. Subject : - Accounting In 20X4, Fredup Inc. purchased a piece of equipment for $21,000. The equipment has a 7-year useful life and no residual value. The equipment was erroneously included as an expense in the year. The error was discovered in December 20X8. Required: Prepare the journal entry to record the adjustment in December 20X8. (Assume the company uses straight line depreciation, ignore taxes.)
On December 31, Strike Company sold one of its batting cages for $12,489. The equipment had an initial cost of $427,900 and has accumulated depreciation of $406,505. Depreciation has been recorded up to the end of the year. What is the amount of the gain or loss on this transaction? a.Loss of $12,489 b.Loss of $8,906 c.Gain of $8,906 d.Gain of $12,489
s
Tamarisk Cole Inc. acquired the following assets in January of 2018. Equipment, estimated service life, 5 years; salvage value, $15,500 $546,500 Building, estimated service life, 30 years; no salvage value $639,000 The equipment has been depreciated using the sum-of-the-years’-digits method for the first 3 years for financial reporting purposes. In 2021, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but no change was made in the estimated service life or salvage value. It was also decided to change the total estimated service life of the building from 30 years to 40 years, with no change in the estimated salvage value. The building is depreciated on the straight-line method. (a) Prepare the general journal entry to record depreciation expense for the equipment in 2021. (b) Prepare the journal entry to record depreciation expense for the building in 2021. (Round answers to 0 decimal places,…
On January 1, Hawaiian Specialty Foods purchased equipment for $31,000. Residual value at the end of an estimated four-year service life is expected to be $5,800. The machine operated for 3,110 hours in the first year, and the company expects the machine to operate for a total of 21,000 hours. Record depreciation expense for each of the first two years using the straight-line method. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
The accounting records of Ehrlich Inc. show the following data for 20201. Life insurance expense on officers was $10,000.2. Equipment was acquired in early January for $450,000. Straight-line depreciation over a 6-year life is used, with no salvagevalue. For tax purposes, Ehrlich used a 30% rate to calculate depreciation.3. Interest revenue on municipal bonds totaled $3,600.4. Product warranties were estimated to be $90,000 in 2020. Actual repair and labor costs related to the warranties in 2020were $24,000. The remainder is estimated to be paid evenly in 2021 and 2022.5. Sales on an accrual basis were $500,000. For tax purposes, $400,000 was recorded on the installment-sales method.6. Fines incurred for securities violations were $10,600.7. Pretax financial income was $460,000. The tax rate is 30%.Instructions(a) Prepare a schedule starting with pretax financial income in 2020 and ending with taxable income in 2020.(b) Prepare the journal entry for 2020 to record income taxes payable,…