Question

Concord Corporation began operations on January 1, 2017. During its first 3 years of operations, Concord reported net income and declared dividends as follows:

		Net income			Dividends declared
2017		$49,200			$ –0–
2018		129,000			59,400
2019		160,800			56,400

The following information relates to 2020.

Income before income tax		$228,600
Prior period adjustment: understatement of 2018 depreciation expense (before taxes)		$31,000
Cumulative decrease in income from change in inventory methods (before taxes)		$45,000
Dividends declared (of this amount, $31,000 will be paid on Jan. 15, 2021)		$115,800
Effective tax rate		20	%

Prepare a 2020 retained earnings statement for Concord Corporation. (List items that increase adjusted retained earnings first.)

CONCORD CORPORATION Retained Earnings Statement                                                                       December 31, 2020For the Year Ended December 31, 2020For the Quarter Ended December 31, 2020
Correction for Depreciation ErrorCumulative Decrease in Income from Change in Inventory MethodsDividends DeclaredExpensesNet Income / (Loss)Balance, January 1, as AdjustedBalance, January 1, as ReportedBalance, December 31RevenuesTotal ExpensesTotal Revenues		$
Correction for Depreciation ErrorCumulative Decrease in Income from Change in Inventory MethodsDividends DeclaredExpensesNet Income / (Loss)Balance, January 1, as AdjustedBalance, January 1, as ReportedBalance, December 31RevenuesTotal ExpensesTotal Revenues
Correction for Depreciation ErrorCumulative Decrease in Income from Change in Inventory MethodsDividends DeclaredExpensesNet Income / (Loss)Balance, January 1, as AdjustedBalance, January 1, as ReportedBalance, December 31RevenuesTotal ExpensesTotal Revenues
Correction for Depreciation ErrorCumulative Decrease in Income from Change in Inventory MethodsDividends DeclaredExpensesNet Income / (Loss)Balance, January 1, as AdjustedBalance, January 1, as ReportedBalance, December 31RevenuesTotal ExpensesTotal Revenues
AddLess:                                                                       Correction for Depreciation ErrorCumulative Decrease in Income from Change in Inventory MethodsDividends DeclaredExpensesNet Income / (Loss)Balance, January 1, as AdjustedBalance, January 1, as ReportedBalance, December 31RevenuesTotal ExpensesTotal Revenues
AddLess:                                                                       Correction for Depreciation ErrorCumulative Decrease in Income from Change in Inventory MethodsDividends DeclaredExpensesNet Income / (Loss)Balance, January 1, as AdjustedBalance, January 1, as ReportedBalance, December 31RevenuesTotal ExpensesTotal Revenues
Correction for Depreciation ErrorCumulative Decrease in Income from Change in Inventory MethodsDividends DeclaredExpensesNet Income / (Loss)Balance, January 1, as AdjustedBalance, January 1, as ReportedBalance, December 31RevenuesTotal ExpensesTotal Revenues		$

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Assume Concord Corporation restricted retained earnings in the amount of $64,000 on December 31, 2020. After this action, what would Concord report as total retained earnings in its December 31, 2020, balance sheet?

Total retained earnings

$

Answer 1

Eddie Zambrano Corporation Retained Earnings Statement For the Year Ended December 31, 2014 Balance, January 1, as reported Correction for depreciation error Cumulative decrease in income from change in inventory methods Balance, January 1, as adjusted Add: Net income $223,200 49200+129000+160800-0-59400-56400 (24,800 (31000*(1-0.2) (36,000) (45000*(1-0.2) 162,400 182,880|1228600*(228600*0.2) 345,280 115,800 $229,480 Deduct dividends declared Balance, December 31 (b) Assume Eddie Zambrano Corp. restricted retained earnings in the amount of | $64,000 on December 31, 2014. After this action, what would Zambrano report as total retained earnings in its December 31, 2014, balance sheet? Total retained earnings would still be reported as $229,480. A restriction does not affect total retained earnings; it merely labels part of the retained earnings as being unavailable for dividend distribution. Retained earnings would be reported as follows: Retained earnings Appropriated Unappropriated Total $ $ $ 64,000 165,480 229,480