mcentire corporation began operations on january 1 2009 during 248541

McEntire Corporation began operations on January 1, 2009. During its first 3 years of operations, McEntire reported net income and declared dividends as follows.



The following information relates to 2012.

Income before income tax $220,000

Prior period adjustment: understatement of 2010 depreciation expense (before taxes) $ 25,000

Cumulative decrease in income from change in inventory methods (before taxes) $ 45,000

Dividends declared (of this amount, $25,000 will be paid on January 15, 2013) $100,000

Effective tax rate 40%

Instructions

(a) Prepare a 2012 retained earnings statement for McEntire Corporation.

(b) Assume McEntire restricted retained earnings in the amount of $70,000 on December 31, 2012. After this action, what would McEntire report as total retained earnings in its December 31, 2012, balancesheet?

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