Question

May Bakery, Inc. reported a prior-period adjustment in 2016.An accounting error caused net income of prior years to be overstated by $6,000.Retained Earnings at December 31, 2015, as previously reported, was $39,000.Net income for 2016 was $72,000, and dividends declared were $23,000.Prepare the company's statement of retained earnings for the year ended December 31, 2016.

Answer 1

Answer:

Particulars                                                  Amount

Retained earnings January 1,2016            $39,000

as originally posted

Prior period adjustment                             $6,000

Retained earnings as adjusted                  $33,000

Net Income for the year                             $72,000

                                                                    $105,000

Dividends declared                                    $23,000

Retained earnings December 31, 2016  $82,000