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The retained earnings statement for swifty Corporation is: $320,920.
Balance, January 1 $223,200
($49,200 + $129,000 + $160,800 - $0 - $59,400 - $56,400)
Less Correction for depreciation error $24,800
[$31,000× (1 - 20%)]
Less Cumulative decrease in income from change in inventory methods $36,000
[$45,000 × (1 - 20%)]
Balance, January 1, as adjusted $162,400
($223,200-$24,800-$36,000)
Add Net income $274,320
[$228,600+($228,600×20%)}
Less Dividends declared $115,800
Balance, December 31 $320,920
Therefore the retained earnings statement for swifty Corporation is: $320,920.
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The complete question is:
Swifty Corporation began operations on January 1, 2017. During its first 3 years of operations, Concord reported net income and declared dividends as follows:
Net income Dividends declared
2017 $49,200 $-0-
2018 129,000 59,400
2019 160,800 56,400
The following information relates to 2020.
Income before income tax $228,600
Prior period adjustment: understatement of 2018 depreciation expense (before taxes) $31,000
Cumulative decrease in income from the change in inventory methods (before taxes) $45,000
Dividends declared (of this amount, $31,000 will be paid on Jan. 15, 2021) $115,800
Effective tax rate 20%
Prepare a 2020 retained earnings statement for swifty Corporation.