Answer: Please see below for answer
Explanation: Retained earnings is the portion of net income accumulated in a company which can be used for future reinvestment purposes after the cumulative amount of dividends  declared have been deducted.
Solution- Using items that increase retained earnings first before any deduction 
                               Vaughn Corporation
                              Retained earnings statements 
                               Ended December 31st, 2017.
 Retained Earnings as Reported on January 1st  $706,100
Correction for  Overstatement of expenses         $89.100
Retained earnings as adjusted =                            $795,200
 (Add) Net income/loss                                           $1, 638,400
 Net cash dividend (less)                                           -$83, 100
Retained Earnings in December 31st 2017           $2,350,500