Titanic Corporation\'s net income for the year ended December 31, 2013, is $380,

Question

Titanic Corporation's net income for the year ended December 31, 2013, is $380,000. On June 30, 2013, a $0.75 per-share cash dividend was declared for all common stockholders. Common stock in the amount of 38,000 shares was outstanding at the time. The market price of Titanic's stock at year end (12/31/13) is $18 per share. Titanic had a $1,100,000 credit balance in retained earnings at December 31, 2012. Assume that on July 31, 2013, Titanic discovered that 2012 depreciation was overstated by $75,000. Required: Hide Prepare Titanic's retained earnings statement for the year ended December 31, 2013, assuming the 2012 tax rate was 30%. Titanic Corporation Retained Earnings Statement For the Year Ended December 31, 2013 $ $ $

Explanation / Answer

Income before tax = $380,000/1-0.3 = $542,857

Correct Income =  $542,857 - $75,000 =$467,857

Net Income after tax = $467,857* (1-0.3) =$ 327,500

Titanic Corporation Retained Earnings Statement For the Year Ended December 31, 2013 Particular $ Balance at January 1,2013     100,000 Add: profit for the year     327,500 Less: Dividend declared and paid (38000shares*0.75)     (28,500) Balance December 31,2013     399,000

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.