Corporation began operations on January 1, 2007. During its first 3 years of ope
ID: 2370150 • Letter: C
Question
Corporation began operations on January 1, 2007. During its first 3 years of operations, Ipad reported net income and declared dividends as follows.
Year Net income Dividends declared
2009 $45,000 $0
2010 130,000 55,000
2011 165,000 55,000
The following information relates to 2012:
Income before income taxes $220,000
Prior period adjustment: Understatement of 2010 depreciation expense.
(Before taxes) $28,000
Cumulative decrease in income from change in inventory methods (before taxes) $45,000
Dividends declared $110,000
Of the dividends declared to date, the amount that will be paid on Jan 15, 2013 is: $27,500
Effective tax rate 40%
Instructions:
(a) Prepare a 2012 retained earnings statement for Ipad Corporation.
IPAD CORPORATION
Retained Earnings Statement
For the Year Ended December 31, 2012
Balance, January 1, as reported Amount
Title Amount
Title Amount
Title Formula
Add: Net income Amount
Formula
Title Amount
Title Formula
(b) Assume Ipad Corp. restricted retained earnings in the amount of $70,000
" on December 31, 2012. After this action, what would Ipad report as total retained earnings in its
December 31, 2012, balance sheet?"
Enter text answer here.
Retained earnings
Appropriated Amount
Unappropriated Amount
Total Amount
Explanation / Answer
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