Prepare Lester statement of retained earnings

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Problem - Disclosure of Intraperiod Tax Allocation Lester Corporation reports $119,000 of both pretax accounting "income" and taxable income in 2019. In addition to income from continuing operations (of which revenues are $500,000), included in this "income" is a $17,000 loss from operations of discontinued Division W, a $15,000 gain on the disposal of Division W, and a $14,000 correction of an error due to the understatement of bad debt expense in 2018. Lester is subject to a 20% tax rate on the first $50,000 of income and a rate of 25% on income in excess of $50,000.

Required -

1. Show how this information is disclosed on Lester's 2019 income statement.

2. Prepare Lester's 2019 statement of retained earnings. (Assume a beginning retained earnings balance of $191,000 and cash dividends during 2019 amounting to $65,000.)

Reference no: EM132891129

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