Transcript Document

Statement of Retained
Earnings
And
Prior Period Adjustments
Chapter
4-1
Prior Period Adjustments
Adjustments to the Beginning Balance of Retained
Earnings to correct accumulated earnings
reported from prior years.
Prior Period Adjustments may be reported to adjust
for
Chapter
4-2
1.
Changes in Accounting Principle
2.
Corrections of Errors
LO 4 Explain how to report irregular items.
Retained Earnings Statement
Woods, Inc.
Statement of Retained Earnings
For the Year Ended December 31, 2012
Balance, January 1
Net income
Dividends
Balance, December 31
$
$
1,050,000
360,000
(300,000)
1,110,000
Before issuing the report for the year ended December 31, 2012, you
discover a $50,000 error (net of tax) that caused the 2011 inventory to
be overstated (overstated inventory caused COGS to be lower and thus
net income to be higher in 2011). Would this discovery have any impact
on the reporting of the Statement of Retained Earnings for 2012?
Chapter
4-3
LO 7 Prepare a retained earnings statement.
Retained Earnings Statement
Woods, Inc.
Statement of Retained Earnings
For the Year Ended December 31, 2012
Balance, January 1, as previously reported
Prior period adjustment - error correction
Balance, January 1, as restated
Net income
Dividends
Balance, December 31
Chapter
4-4
$
$
1,050,000
(50,000)
1,000,000
360,000
(300,000)
1,060,000
LO 7 Prepare a retained earnings statement.
Retained Earnings Statement
Class Example
XYZ Co.
Statement of Retained Earnings
For the Year Ended December 31, 2014
Balance, January 1, as previously reported
Prior period adjustment - Change in Principle
Balance, January 1, as restated
Net income
Dividends
Balance, December 31
Chapter
4-5
$
$
1,500,000
136,500
1,636,500
488,750
(300,000)
1,825,250