The amount of net income that remains for the company after dividend payments to shareholders is known as retained earnings . Typically, the management of the company decides whether to keep the profits or distribute them to the shareholders. The balance of retained earnings as of December 31

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Chapter 11, Problem 16E

To determine

Introduction: The amount of net income that remains for the company after dividend payments to shareholders is known as retained earnings. Typically, the management of the company decides whether to keep the profits or distribute them to the shareholders.

The balance of retained earnings as of December 31

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uscan Incorporated had a retained earnings balance of $72,000 at December 31 of the prior year. In the current year, Tuscan reported the following results. Reported net income of $112,000. Cash dividends of $45,000 declared and paid. Tuscan discovered this year that it made a math error three years ago; to correct for this, $24,000 (net of tax) must be added to the current year’s beginning retained earnings balance. Revised an estimate of a machine’s salvage value. Depreciation increased by $2,200 per year. Calculate the retained earnings balance at December 31 of the current year. (Amounts to be deducted should be indicated with a minus sign.) TUSCAN INCORPORATED Statement of Retained Earnings For Current Year Ended December 31 Prior Period Adjustment 0

Tuscan Incorporated had a retained earnings balance of $60,000 at December 31 of the prior year. In the current year, Tuscan reported the following results. • Reported net income of $100,000. • Cash dividends of $33,000 declared and paid. • Tuscan discovered this year that it made a math error three years ago; to correct for this, $12,000 (net of tax) must be added to the current year's beginning retained earnings balance. • Revised an estimate of a machine's salvage value. Depreciation increased by $1,000 per year. Calculate the retained earnings balance at December 31 of the current year. Note: Amounts to be deducted should be indicated with a minus sign. TUSCAN INCORPORATED Statement of Retained Earnings For Current Year Ended December 31 Retained earnings, December 31, prior year, as previously reported Prior period adjustment $ 60,000 $ 60,000 60,000

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