Problem

(L.OBJ. 5) Reporting a prior-period adjustment [10 min] Real Statistical Research, Inc....

(L.OBJ. 5) Reporting a prior-period adjustment [10 min]

Real Statistical Research, Inc., (RSRI) ended 2010 with retained earnings of $72,000. During 2011 RSRI earned net income of $85,000 and declared dividends of $25,000. Also during 2011, RSRI got a $22,000 tax refund from the Internal Revenue Service. A tax audit revealed that RSRI paid too much income tax back in 2009.

Requirement

1. Prepare Real Statistical Research’s statement of retained earnings For the year ended December 31, 2011, to report the prior-period adjustment.

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