Reference no: EM133141626
Question - The following information is available for Teal Mountain Corporation:
Retained Earnings, December 31, 2019 $1,625,000
Net Income for the year ended December 31, 2020 $240,000
The company accountant, in preparing financial statements for the year ending December 31, 2020, has discovered the following information:
The company's previous bookkeeper, who has been fired, had recorded depreciation expense on equipment in 2018 and 2019 using the double-declining-balance method of depreciation. The bookkeeper neglected to use the straight-line method of depreciation which is the company's policy. The cumulative effects of the error on prior years was $28,000, ignoring income taxes. Depreciation was computed by the straight-line method in 2020.
Required -
(a) Prepare the entry for the prior period adjustment.
(b) Prepare the retained earnings statement for 2020.
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: The information is available for Teal Mountain Corporation: Retained Earnings, December 31, 2019 $1,625,000. Prepare the entry for the prior period adjustment
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