Reference no: EM133055171
Question - The ledger of Wildhorse Limited at October 31, 2021, contains the following summary data:
Cash dividends-common $115,000
Common shares 640,000
Depreciation expense 87,000
Service revenue 1,461,000
Operating expenses 921,000
Interest expense 50,000
Retained earnings, November 1, 2020 565,000
Your analysis reveals the following additional information:
1. The company has a 25% income tax rate.
2. On March 19, 2021, Wildhorse discovered an error made in the previous fiscal year. A $51,000 payment of a note payable had been recorded as interest expense.
3. On April 10, 2021, common shares costing $71,000 were reacquired for $95,000. This is the first time the company has reacquired common shares.
Required -
1. Prepare a journal entry to correct the prior period error.
2. Calculate profit for the year ended October 31, 2021.
3. Prepare the statement of retained earnings for the company for the year ended October 31, 2021.