Ex. 313
Record the following transactions for Grogan Corporation on the dates indicated.
1.On March 31, 2014, Grogan Corporation discovered that depreciation expense on factory equipment for the year ended December 31, 2013, had been recorded twice, for a total amount of $50,000 instead of the correct amount of $25,000.
2.On June 30, 2014, the company's internal auditors discovered that the April 2014 telephone bill for $2,500 had erroneously been charged to the Interest Expense account.
3.On August 14, 2014, cash dividends on preference shares of $110,000 declared on July 1, 2014, were paid.
Ex. 314
The following information is available for Piper Corporation:
Retained Earnings, December 31, 2013?1,500,000
Net Income for the year ended December 31, 2014? 250,000
The company accountant, in preparing financial statements for the year ending December 31, 2014, has discovered the following information:
The company's previous bookkeeper, who has been fired, had recorded depreciation expense on a machine in 2012 and 2013 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 ?15,000, ignoring income taxes. Depreciation was computed by the straight-line method in 2014.
Instructions
(a)Prepare the entry for the prior period adjustment.
(b)Prepare the retained earnings statement for 2014.
Ex. 315
The following information is available for Trenton Inc.:
Beginning retained earnings$600,000
Cash dividends declared50,000
Net income for 2014120,000
Share dividend declared10,000
Understatement of last year's depreciation expense40,000
Instructions
Based on the preceding information, prepare a retained earnings statement for 2014.
Ex. 316
Reese Company reported retained earnings at December 31, 2013, of $310,000. Reese had 160,000 ordinary shares outstanding throughout 2014.
The following transactions occurred during 2014.
1.An error was discovered in 2012, depreciation expense was recorded at $70,000, but the correct amount was $50,000.
2.A cash dividend of $0.50 per share was declared and paid.
3.A 10% share 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 2014.