Requirea: Using the information in your book for E22-9 please do the following: 1. Prepare restated Income Statements for 2017 and 2018. 2. Prepare restated Statement of Retained Earnings for 2017 and 2018
Homework Answers
Answer :
| Requirement 1 | ||
|
Comparative Income Statements For The Years 2018 and 2017 |
||
| 2018 | 2017 | |
| Sales | 340000 | 270000 |
| Cost of sales | 176000 | 166000 |
| Gross Profit | 164000 | 104000 |
| Expenses | 83000 | 50000 |
| income before cumulative effect of a change in accounting principle | 81000 | 5400 |
| Cumulative effect on prior years of retro - active application of new depreciation method | 15000 | |
| Net income | 96000 | 54000 |
|
$200,000 - $24,000 = $176000 $142,000 + $24,000 = $166000 $88,000 - ($30,000 - $ 25,000) = $83000 |
||
|
Statement of Retained Earnings For the years 2018 and 2017 |
||
| 2018 | 2017 | |
| Retained earnings (January 1) | 101000 | 72000 |
| Net income | 96000 | 54000 |
| Dividends | -30000 | -25000 |
| Retained earnings (December 31) | 167000 | 101000 |
|
Statement of income For the year 2018 |
||
| Sales | 340000 | |
| Cost of sales | 176000 | |
| Gross profit | 164000 | |
| Expenses | 83000 | |
| Income before cumulative effect of a change in accounting principle | 81000 | |
| Cumulative effect on prior years of retro - active application of new depreciation method | 15000 | |
| Net income | 96000 | |
|
Statement of Retained Earnings For the year 2018 |
||
| Retained earnings (January 1) | 125000 | |
| prior period adjustment - inventory correction | -24000 | |
| Retained earnings adjusted | 101000 | |
| Net income | 96000 | |
| Dividends | -30000 | |
| Retained earnings (December 31) | 167000 | |
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