Prepare a 2012 retained earnings statement for mcentire

Reference no: EM13596596

McEntire Corporation began operations on January 1, 2009. During its first 3 years of operations, McEntire reported net income and declared dividends as follows.

Net income Dividends declared

2009 $40,000 $ -0-
2010 125,000 50,000
2011 160,000 50,000

The following information relates to 2012.

Income before income tax $220,000
Prior period adjustment: understatement of 2010 depreciation expense (before taxes) $25,000
Cumulative decrease in income from change in inventory methods (before taxes) $45,000
Dividends declared (of this amount, $25,000 will be paid on Jan. 15, 2013) $100,000
Effective tax rate 40%

(a) Prepare a 2012 retained earnings statement for McEntire Corporation. (Enter all amounts as positive amounts and subtract where necessary.)

(b) Assume McEntire Corp. restricted retained earnings in the amount of $70,000 on December 31, 2010. After this action, what would McEntire report as total retained earnings in its December 31, 2010, balance sheet?

Reference no: EM13596596

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