Question:
Below is the Retained Earnings account for the year 2014 for Acadian Corp.
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Retained earnings, January 1, 2014
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$261,530
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Add:
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Gain on sale of investments (net of tax)
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$45,130
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Net income
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88,430
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Refund on litigation with government, related to the year 2011
(net of tax)
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25,530
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Recognition of income earned in 2013, but omitted from income
statement in that year (net of tax)
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29,330
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188,420
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449,950
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Deduct:
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Loss on discontinued operations (net of tax)
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38,930
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Write-off of goodwill (net of tax)
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63,930
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Cumulative effect on income of prior years in changing from
LIFO to FIFO inventory valuation in 2014 (net of tax)
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27,130
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Cash dividends declared
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35,930
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165,920
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Retained earnings, December 31, 2014
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$284,030
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Prepare a corrected retained earnings statement. Acadian Corp. normally sells investments of the type mentioned above. FIFO inventory was used in 2014 to compute net income