Question

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

		Net income			Dividends declared
2017		$43,300			$ –0–
2018		126,900			58,000
2019		161,500			55,800

The following information relates to 2020.

Income before income tax		$230,700
Prior period adjustment: understatement of 2018 depreciation expense (before taxes)		$26,700
Cumulative decrease in income from change in inventory methods (before taxes)		$45,000
Dividends declared (of this amount, $26,700 will be paid on Jan. 15, 2021)		$113,800
Effective tax rate		20	%

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

Assume Wildhorse Corporation restricted retained earnings in the amount of $63,810 on December 31, 2020. After this action, what would Wildhorse report as total retained earnings in its December 31, 2020, balance sheet?

Total retained earnings

$

Answer 1

Answer
1
Retained Earnings Statement
Balance,Jan 1 as reported (43300+126900+161500-58000-55800)	$           217,900
Correction for depreciation error (26700*(1-.20)	-$            21,360
cumulative decrease in income from change in inventory methods
(45000*(1-.20)	-$            36,000
Balance <january 1 adjusted	$           160,540
Add:Net income (230700*(1-.2)	$           184,560
	$           345,100
less:dividend declared	$           113,800
Balance ,December 31	$           231,300
2
Retained earnings would be reported as follows .
Retained earnings	Amount
Apportioned	$             63,810
Un apportioned (231300-63810)	$           167,490