Question

In 2014, Draper Company discovered errors made in 2011-2013, its first three years of operation. I 2013 2012 2011 Items not recognized Prepaid expenses Accrued expenses Other information Reported net income Dividends declared and paid Common stock and additional paid in capital at 12/31 $1,300 950 $900 700 $550 800 $23,000 4,100 22,000 $25,000 2,600 17,000 $20,000 5,000 15,000 Corrected 12/31/13 Total Equity will be: Select one a. $78,450 b. $110,300 c$77,950 d. 5110,650 e. $78,650

Answer 1

C. $77,950
Total Equity
Retained Earnings	$55,950
Common Stock and additional paid-in capital	$22,000
	$77,950
Retained Earnings as on 12/31/2013
Net Income 2013	$18,550
($23,000 - $4,100 + $950 - $1,300)
Net Income 2012	$22,400
($25,000 - $2,600)
Net Income 2011	$15,000
($20,000 - $5,000)
	$55,950