Question

Leonard Corporation reports the following information for the year 2019: Correction of overstatement of depreciation expense...

Leonard Corporation reports the following information for the year 2019:

Correction of overstatement of depreciation expense

in prior years, net of tax $ 1,290,000

Dividends declared $ 960,000

Net income $ 3,000,000

Retained earnings, 1/1/2019, as reported $6,000,000

Leonard Corporation should report retained earnings, 1/1/2019, as adjusted at:

Select one:

a. $6,750,000.

b. $4,710,000.

c. $6,000,000.

d. $7,290,000

Business   Accounting   
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Answer #1

Correction of overstatement of depreciation expense in prior years, net of tax = $1,290,000

Dividends declared = $960,000

Net income = $3,000,000

Retained earnings, 1/1/2019 = $6,000,000

Statement of Retained Earnings

Retained earnings, 1/1/2019, as reported 6,000,000
Correction of overstatement of depreciation expense in prior years, net of tax 1,290,000
Retained earnings, 1/1/2019, as adjusted $7,290,000

Retained earnings, 1/1/2019, as adjusted = $7,290,000

Correct option is (D)

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