Brief Exercise 4-10 Vaughn Corporation has retained earnings of $712,800 at Janu

Question

Brief Exercise 4-10 Vaughn Corporation has retained earnings of $712,800 at January 1, 2017. Net income during 2017 was $1,558,200, and cash dividends declared and paid during 2017 totaled $79,800. Prepare a retained earnings statement for the year ended December 31, 2017. Assume an error was discovered: land costing $88,260 (net of tax) was charged to maintenance and repairs expense in 2014 List items that increase retained earnings first.) VAUGHN CORPORATION Retained Earnings Statement Correction for Overstatement of Expenses in Prior Period Cash Dividends Expenses Net Income/ (Loss) Retained Earnings, January 1, as Adjusted Retained Earnings, January 1, as Reported Retained Earnings, December 31 Revenues Total Expenses Total Revenues LINK TO TEXT LINK TO TEXT

Explanation / Answer

Retained Earnings Statement

Retained earnings as on Jan 1, 2017 $7,12,800 Add: Correction of overstatement of expenses in prior period $88,260 Add: Net income $15,58,200 Subtotal $23,59,260 Less: cash dividends paid $79,800 Retained earnings as on Dec 31, 2017 $22,79,460

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