Question

Cindy May​ Bakery, Inc. reported a​ prior-period adjustment in 2018. An accounting error caused net income of prior years to be overstated by $ 8 comma 000. Retained Earnings at December​ 31, 2017​, as previously​ reported, was $ 44 comma 000. Net income for 2018 was $ 78 comma 000​, and dividends declared were $ 25 comma 000. Prepare the​ company's statement of retained earnings for the year ended December​ 31, 2018.

Answer 1

Answer:

Retained Earnings at December​ 31, 2018 is $89,000

Explanation:

Adjusted Retained Earnings at December​ 31, 2017​ = Retained Earnings at 31 December​ 2017​ - Overstated amount = $44,000 - $8,000 = 36,000

Retained Earnings for 2018 = Net income - dividend = $78,000 - $25,000 = $53,000

Cindy May​ Bakery, Inc.'s statement of retained earnings for the year ended December​ 31, 2018

Details                                                                                    $

Adjusted Retained Earnings at December​ 31, 2017​       36,000

Retained Earnings for 2018                                             53,000

Retained Earnings at December​ 31, 2018                      89,000