Asked by Nathan Labonté on Jun 04, 2024
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The Samba Company, during 2010, reported net income on its income statement of $90, 000.There were 8, 000 shares of common stock outstanding during the entire year, and a $5 per-share dividend was declared on November 21, 2010.During the year, it was discovered that depreciation of $50, 000 was overstated in 2008 on some production equipment.The retained earnings balance on January 1, 2010 was $300, 000, and the income tax rate on all items of income is 40%.
Required:
Prepare a retained earnings statement for the year ended December 31, 2010.
Depreciation
Depreciation is the systematic allocation of the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.
Retained Earnings
The portion of a company's profit that is held back and not distributed to shareholders, used for reinvestment or debt payment.
Dividend
A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
- Understand and apply the concept of retained earnings adjustments and corrections of prior period errors.
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Learning Objectives
- Understand and apply the concept of retained earnings adjustments and corrections of prior period errors.
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