The ledger of Weather Vane Limited at September 30, 2024, contains the following summary data:

Cash dividends—common ................................................................   $ 150,000 

Common shares ......................................................................................  750,000 

Depreciation expense ............................................................................     74,000 

Service revenue ......................................................................................1,647,000 

Operating expenses ................................................................................$971,000 

Commission revenue .................................................................................65,000 

Retained earnings, October 1, 2023 ........................................................845,000  

Your analysis reveals the following additional information: 

1. The company has a 25% income tax rate. 

2. On July 9, 2024, Weather Vane discovered an error made in the previous fiscal year. A $61,500 payment of a note payable had been recorded as interest expense. 

3. On August 18, 2024, common shares costing $57,500 were reacquired for $90,000. This is the first time the company has reacquired common shares. 

Instructions 

a. Prepare a journal entry to correct the prior period error. 

b. Prepare the journal entry to record the reacquisition of common shares. 

c. Calculate profit for the year ended September 30, 2024. 

d. Prepare the statement of retained earnings for the year ended September 30, 2024.

If an error from a previous year is found and corrected, why is it also important to restate the prior years’ data shown for comparative purposes?