Problem

(L. OBJ. 5) Preparing a statement of retained earnings [10 min] Rachel Lou Bakery, Inc....

(L. OBJ. 5) Preparing a statement of retained earnings [10 min]

Rachel Lou Bakery, Inc., reported a prior-period adjustment in 2010. An accounting error caused net income of prior years to be overstated by $2,000. Retained earnings at December 31, 2009, as previously reported, stood at $46,000. Net income for 2010 was $76,000, and dividends were $25,000.

Requirement

1. Prepare the company’s statement of retained earnings for the year ended December 31, 2010.

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