Question

Blossom Corporation began operations on January 1, 2017. During its first 3 years of operations, Blossom...

Blossom Corporation began operations on January 1, 2017. During its first 3 years of operations, Blossom reported net income and declared dividends as follows:

Net income

Dividends declared
2017 $43,300 $ –0–  
2018 127,900 52,400  
2019 165,300 51,100  

The following information relates to 2020.

Income before income tax $227,400
Prior period adjustment: understatement of 2018 depreciation expense (before taxes) $25,900
Cumulative decrease in income from change in inventory methods (before taxes) $41,100
Dividends declared (of this amount, $25,900 will be paid on Jan. 15, 2021) $103,500
Effective tax rate 20 %

Assume Blossom Corporation restricted retained earnings in the amount of $75,090 on December 31, 2020. After this action, what would Blossom report as total retained earnings in its December 31, 2020, balance sheet?

Total retained earnings

$
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

first let us know the balance of retained earnings:

opening balance of retained earnings (43300+127900+165300-52400-51100) 233,000
less:correction for depreciation net off tax (25,900 -20%) (20,720)
less: decrease in inventory (41,100-20%) (32,880)
adjusted balance of retained earnings 179,400
add: net income after tax (227,400-20%) 181,920
361,320
less: dividend declared (103,500)
closing balance of retained earnings 257,820

even after restricting retained earnings to $75,090, the retained earnings on december 31 2020 will be reported at 244,420.

total retained earnings 257,820

working:

retained earnings
appropriated 75,090
unappropriated (244,420-75,090) 182,730
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Cheyenne Corporation began operations on January 1, 2014. During its first 3 years of operations, Cheyenne...
Cheyenne Corporation began operations on January 1, 2014. During its first 3 years of operations, Cheyenne reported net income and declared dividends as follows: Net income Dividends declared 2014 $47,800 $ –0– 2015 130,500 56,500 2016 167,700 60,000 The following information relates to 2017: Income before income tax $248,300 Prior period adjustment: understatement of 2015 depreciation expense (before taxes) $28,800 Cumulative decrease in income from change in inventory methods (before taxes) $43,000 Dividends declared (of this amount, $28,800 will be...
Exercise 4-15 The Bramble Corporation, a private company, began operations on January 1, 2017. During its...
Exercise 4-15 The Bramble Corporation, a private company, began operations on January 1, 2017. During its first three years of operations, Bramble reported net income and declared dividends as follows: Net income Dividends declared 2017 $54,000 $0 2018 134,000 50,000 2019 164,000 50,000 The following information is for 2020: Income before income tax $360,000 Correction of prior period error: understatement of 2018 depreciation expense (before tax) 39,000 Cumulative increase in prior years’ income from change in inventory method (before tax)...
Sheffield Corporation began 2017 with a $98,000 balance in the Deferred Tax Liability account. At the...
Sheffield Corporation began 2017 with a $98,000 balance in the Deferred Tax Liability account. At the end of 2017, the related cumulative temporary difference amounts to $324,200, and it will reverse evenly over the next 2 years. Pretax accounting income for 2017 is $493,800, the tax rate for all years is 40%, and taxable income for 2017 is $414,600. Compute income taxes payable for 2017. Income taxes payable $ Prepare the journal entry to record income tax expense, deferred income...
Tamarisk Corporation has one temporary difference at the end of 2017 that will reverse and cause...
Tamarisk Corporation has one temporary difference at the end of 2017 that will reverse and cause taxable amounts of $58,100 in 2018, $62,900 in 2019, and $68,000 in 2020. Tamarisk’s pretax financial income for 2017 is $320,800, and the tax rate is 40% for all years. There are no deferred taxes at the beginning of 2017. Compute taxable income and income taxes payable for 2017. Taxable income $ Income taxes payable Prepare the journal entry to record income tax expense,...
On January 1, 2020, Blossom Industries had stock outstanding as follows. 6% Cumulative preferred stock, $100...
On January 1, 2020, Blossom Industries had stock outstanding as follows. 6% Cumulative preferred stock, $100 par value, issued and outstanding 9,700 shares $970,000 Common stock, $10 par value, issued and outstanding 203,000 shares 2,030,000 To acquire the net assets of three smaller companies, Blossom authorized the issuance of an additional 163,200 common shares. The acquisitions took place as shown below. Date of Acquisition Shares Issued Company A April 1, 2020 49,200 Company B July 1, 2020 82,800 Company C...
Blossom Corporation had 120,000 common shares outstanding on December 31, 2016. During 2017, the company issued...
Blossom Corporation had 120,000 common shares outstanding on December 31, 2016. During 2017, the company issued 14,500 shares on March 1, retired 4,100 shares on July 1, issued a 20% stock dividend on October 1, and issued 21,600 shares on December 1. For 2017, the company reported net income of $480,000 after a loss from discontinued operations of $68,800 (net of tax). The company issued a 2-for-1 stock split on February 1, 2018, and the company’s financial statements for the...
Oriole Corporation began 2020 with a $54,280 balance in the Deferred Tax Liability account. At the...
Oriole Corporation began 2020 with a $54,280 balance in the Deferred Tax Liability account. At the end of 2020, the related cumulative temporary difference amounts to $413,000, and it will reverse evenly over the next 2 years. Pretax accounting income for 2020 is $619,500, the tax rate for all years is 20%, and taxable income for 2020 is $477,900. Compute income taxes payable for 2020. Income taxes payable $enter Income taxes payable in dollars Prepare the journal entry to record...
The following facts relate to Blossom Corporation. 1. Deferred tax liability, January 1, 2020, $21,000. 2....
The following facts relate to Blossom Corporation. 1. Deferred tax liability, January 1, 2020, $21,000. 2. Deferred tax asset, January 1, 2020, $0. 3. Taxable income for 2020, $99,750. 4. Pretax financial income for 2020, $210,000. 5. Cumulative temporary difference at December 31, 2020, giving rise to future taxable amounts, $252,000. 6. Cumulative temporary difference at December 31, 2020, giving rise to future deductible amounts, $36,750. 7. Tax rate for all years, 20%. 8. The company is expected to operate...
Sleep Corporation was organized on January 1, 2017. During its first year, the corporation issued 40,000...
Sleep Corporation was organized on January 1, 2017. During its first year, the corporation issued 40,000 shares of $5 par value preferred stock and 400,000 shares of $1 par value common stock. At December 31, the company declared the following cash dividends:                         2017                            $ 6,000                         2018                            $30,000                         2019                            $60,000 Instructions (a)   Show the allocation of dividends to each class of stock, assuming the preferred stock dividend is 4% and not cumulative. (b)   Show the allocation of dividends...
The Blossom Corporation is a calendar-year corporation. Its financial statements for the years 2021 and 2020...
The Blossom Corporation is a calendar-year corporation. Its financial statements for the years 2021 and 2020 contained errors as follows: 2021 Ending Inventory Overstated $9,000 Depreciation Expense Understated $6,000 2020 Ending Inventory Overstated $24,000 Depreciation Expense Overstated $18,000 Assume that the proper correcting entries were made at December 31, 2020. By how much will 2021 income before taxes be overstated or understated?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT