Reference no: EM131824771

Question - Retained Earnings Statement, Prior Period Adjustment

Below is the Retained Earnings account for the year 2012 for Acadian Corp.

Retained earnings, January 1, 2012 $257,600 (CR)

Add:

Gain on sale of investments (net of tax) $41,200

Net income 84,500

Refund on litigation with government, related to the year 2009 (net of tax) 21,600

Recognition of income earned in 2011, but omitted from income statement in that year (net of tax) 25,400 (DR) 172,700 (CR) 430,300 (CR)

Deduct:

Loss on discontinued operations (net of tax) 35,000 (DR)

Write-off of goodwill (net of tax) 60,000 (DR)

Cumulative effect on income of prior years in changing from LIFO to FIFO inventory valuation in 2012 (net of tax) 23,200 (DR)

Cash dividends declared 32,000 (DR)

150,200 (CR)

Retained earnings, December 31, 2012 $280,100 (CR)

Instructions - Prepare a corrected retained earnings statement. Acadian Corp. normally sells investments of the type mentioned above. FIFO inventory was used in 2012 to compute net income.