Ex. 280
The following information is available for Piper Corporation:
Retained Earnings, December 31, 2010$1,500,000
Net Income for the year ended December 31, 2011$ 200,000
The company accountant, in preparing financial statements for the year ending December 31, 2011, has discovered the following information:
The company's previous bookkeeper, who has been fired, had recorded depreciation expense on a machine in 2009 and 2010 using the double-declining-balance method of depreciation. The bookkeeper neglected to use the straight-line method of depreciation which is the company's policy. The cumulative effects of the error on prior years was $20,000, ignoring income taxes. Depreciation was computed by the straight-line method in 2011.
Instructions
(a)Prepare the entry for the prior period adjustment.
(b)Prepare the retained earnings statement for 2011.
Ex. 281
The following information is available for Trenton Inc.:
Beginning retained earnings$600,000
Cash dividends declared50,000
Net income for 2011120,000
Stock dividend declared15,000
Understatement of last year's depreciation expense30,000
Instructions
Based on the preceding information, prepare a retained earnings statement for 2011.
Ex. 282
Reese Company reported retained earnings at December 31, 2010, of $310,000. Reese had 160,000 shares of common stock outstanding throughout 2011.
The following transactions occurred during 2011.
1.An error was discovered in 2009, depreciation expense was recorded at $60,000, but the correct amount was $50,000.
2.A cash dividend of $0.50 per share was declared and paid.
3.A 5% stock dividend was declared and distributed when the market price per share was $15 per share.
4.Net income was $225,000.
Instructions
Prepare a retained earnings statement for 2011.
Ex. 283
Harrington Company reported the following balances at December 31, 2010: common stock $500,000; paid-in capital in excess of par value $100,000; retained earnings $250,000. During 2011, the following transactions affected stockholders’ equity.
1.Issued preferred stock with a par value of $150,000 for $200,000.
2.Purchased treasury stock (common) for $40,000.
3.Earned net income of $140,000.
4.Declared and paid cash dividends of $75,000.
Instructions
Prepare the stockholders' equity section of Harrington Company's December 31, 2011, balance sheet.
Ex. 284
On January 1, 2011, Vannon Corporation had Retained Earnings of $378,000. During the year, Vannon had the following selected transactions:
1.Declared stock dividends of $50,000.
2.Declared cash dividends of $90,000.
3.A 2 for 1 stock split involving the issuance of 200,000 shares of $5 par value common stock for 100,000 shares of $10 par value common stock.
4.Suffered a net loss of $70,000.
5.Corrected understatement of 2010 net income because of an inventory error of $48,000.
Instructions
Prepare a retained earnings statement for the year.