Question

Please help these answers are wrong and this is for a grade!!!

Crane Corporation began operations on January 1, 2017. During its first 3 years of operations, Crane reported net income and declared dividends as follows: Dividends declared $-0- 2017 2018 2019 Net income $47800 130500 167700 56500 60000 The following information relates to 2020. Income before income tax Prior period adjustment: understatement of 2018 depreciation expense (before taxes) Cumulative decrease in income from change in inventory methods (before taxes) Dividends declared (of this amount, $28800 will be paid on Jan. 15, 2021) Effective tax rate $248300 $28800 $43000 $116500 20%

Answer 1

Answer a :

Note : The Effective tax rate is given at 20 % . but you calculated all your figures taking tax rate at 40 %

CRANE CORPORATION

Retained Earnings Statement.

For the Ended December 31, 2020.

Balance, January 1, as reported	$229500
Correction for depreciation error [$28,800 * 80%]	(23040)
Cumulative decrease in income from change in inventory methods [$43,000 * 80%]	(34,400)
Balance, January 1, as adjusted	172060
Add: Net income [$248,300 * 80%]	198640
Less: Dividends declared	116500
Balance, December 31	$254200

Answer 2 : Total retained earnings = $254200.

Explanation : Restricted retained earnings is a part of total retained earnings. Total retained earnings remains the same