Problem 3 (Retained Earnings Statement, Prior Period Adjustment) Below is the Re

Question

Problem 3 (Retained Earnings Statement, Prior Period Adjustment) Below is the Retained Earnings account for the year 2014 for Cooper Corp.

Retained earnings, January 1 , 2014 Add:

Gain on discontinued operations (net of tax)

Net income
Gain on sale of investments (net of tax)

Cumulative effect on income of prior years in changing from LIFO to FIFO inventory valuation in 2014 (net of tax)
Refund on litigation with government, related to the year 2011 (net of tax)

Recognition of income earned in 2013 , but omitted from income statement in that year (net of tax)

Deduct:
Write-off of goodwill (net of tax) Cash dividends declared

Retained earnings, December 31 , 2014

Instructions

$ 616,050

$

12,000 168,300 41,200

52,600 51,600

49,700

250,000 60,000

375,400

991,450 310,000

(a) Prepare a corrected retained earnings statement. Cooper Corp. normally sells investments of the type mentioned above. FIFO inventory was used in 2014 to compute net income.

(b) State where the items that do not appear in the corrected retained earnings statement should be shown.

$ 681,450

Explanation / Answer

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