iLife, Inc., was set to report the following statement of retained earnings for the year ended December 31, 2014:
iLife, Inc.
Statement of Retained Earnings
Year Ended December 31, 2014
Retained earnings, December 31, 2013 ......... $56,000
Net income for 2014 ................. 73,000
Dividends declared for 2014 ............. (31,000)
Retained earnings, December 31, 2014 .........$ 98,000
Before issuing its 2014 financial statements, iLife learned that net income of 2013 was over­stated by $ 12,500. Prepare iLife’s 2014 statement of retained earnings to show the correction of the error— that is, the prior- period adjustment.