Below is the Retained Earnings account for the year 2020 for Acadian Corp.

Instructions

a. Prepare a corrected retained earnings statement. Acadian Corp. normally sells investments of the type mentioned above. FIFO inventory was used in 2020 to compute net income.

b. State where the items that do not appear in the corrected retained earnings statement should be shown.

Transcribed Image Text:

Retained earnings, January 1, 2020 Add: $257,600 Gain on sale of investments (net of tax) $41,200 Net income 84,500 Refund on litigation with government, related to the year 2017 (net of tax) 21,600 Recognition of income earned in 2019, but omitted from income statement in that year (net of tax) 172,700 25,400 430,300 Deduct: Loss on discontinued operations (net of tax) Write-off of goodwill (net of tax) Cumulative effect on income of prior years in changing from LIFO to FIFO inventory valuation in 2020 (net of tax) 35,000 60,000 23,200 Cash dividends declared 32,000 150,200 Retained earnings, December 31, 2020 $280,100