M. Taylor has been employed as a bookkeeper at Losser Corporation for a number of years. With the assistance of a clerk, Taylor handles all accounting duties, including the preparation of financial statements. The following is a statement of earned surplus prepared by Taylor for 2008:

Instructions:
1. Prepare a schedule showing the correct net income for 2008. (Ignore income taxes.)
2. Prepare a retained earnings statement for 2008.
3. Explain why you have changed the retained earningsstatement.

Transcribed Image Text:

Losser Corporation Statement of Earned Surplus for 2008 Balance at beginning of year Additions: 85.949 Change in estimate of 2008 amortization expense. Gain on sale of land Interest revenue Profit and loss for 2008 Total additions $ 2800 8,350 4.500 13.680 39.330 $125,279 Total Deductions: Increased depreciation due to change in estimated lifea. Dividends declared and paid Loss on sale of equipment Loss from major casualty (extraordinary) Total deductions 5,000 10,000 3,860 27,730 46,590 $78,689 Balance at end of year