Problem:
C Co. reported a retained earnings balance of $270,000 at December 31, 2012. In September 2013, C determined that insurance premiums of $75,000 for the three-year period beginning January 1, 2012, had been paid and fully expensed in 2012. C has a 40% income tax rate.
Required:
Question: What amount should C report as adjusted beginning retained earnings in its 2013 statement of retained earnings?
A) $300,000
B) $315,000
C) $295,000
D) $320,000
Note: Please describe comprehensively and provide step by step solution.