2 assets were purchased at the beginning of 2025 for $99,000 with an estimated useful life...

 

 

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2 assets were purchased at the beginning of 2025 for $99,000 with an estimated useful life of 4 years and no salvage value. (The 2026 income statement contains depreciation expense of $29,700 on the assets purchased at the beginning of 2025.) In 2026, the company discovered that the ending inventory for 2025 was overstated by $23,200; ending inventory for 2026 is correctly stated. Prepare the revised retained earnings statement for 2025 and 2026, assuming comparative statements. (Ignore income taxes.) NOVAK INC. Retained Earnings Statement For the Year Ended Retained Earnings, January 1, Unadjusted Less Correction of Error for Inventory Overstatement Retained Earnings, January 1. Adjusted Add Net Income Less Dividends Retained Earnings, December 31 2026 2025 28200 Presented below are the comparative income and retained earnings statements for Novak Inc. for the years 2025 and 2026 2026 2025 Sales $346,000 $273,000 Cost of sales 204,000 136,000 Gross profit 142,000 137.000 Expenses 86,700 50,700 Net income $55,300 $86,300 Retained earnings Jan. 1) $138,600 $75,800 Net income 55,300 86,300 Dividends (28,200) (23,500) Retained earnings (Dec. 31) $165,700 $138,600 Q Ad Q Shi Vi Ac Qu ACC Qu Ata Qu Att The following additional information is provided: 1 2 In 2026, Novak Inc. decided to switch its depreciation method from sum-of-the-years' digits to the straight-line method. The assets were purchased at the beginning of 2025 for $99.000 with an estimated useful life of 4 years and no salvage value. (The 2026 income statement contains depreciation expense of $29.700 on the assets purchased at the beginning of 2025) In 2026, the company discovered that the ending inventory for 2025 was overstated by $23,200; ending inventory for 2026 is correctly stated. Que Acco Que Accom 2 assets were purchased at the beginning of 2025 for $99,000 with an estimated useful life of 4 years and no salvage value. (The 2026 income statement contains depreciation expense of $29,700 on the assets purchased at the beginning of 2025.) In 2026, the company discovered that the ending inventory for 2025 was overstated by $23,200; ending inventory for 2026 is correctly stated. Prepare the revised retained earnings statement for 2025 and 2026, assuming comparative statements. (Ignore income taxes.) NOVAK INC. Retained Earnings Statement For the Year Ended Retained Earnings, January 1, Unadjusted Less Correction of Error for Inventory Overstatement Retained Earnings, January 1. Adjusted Add Net Income Less Dividends Retained Earnings, December 31 2026 2025 28200 Presented below are the comparative income and retained earnings statements for Novak Inc. for the years 2025 and 2026 2026 2025 Sales $346,000 $273,000 Cost of sales 204,000 136,000 Gross profit 142,000 137.000 Expenses 86,700 50,700 Net income $55,300 $86,300 Retained earnings Jan. 1) $138,600 $75,800 Net income 55,300 86,300 Dividends (28,200) (23,500) Retained earnings (Dec. 31) $165,700 $138,600 Q Ad Q Shi Vi Ac Qu ACC Qu Ata Qu Att The following additional information is provided: 1 2 In 2026, Novak Inc. decided to switch its depreciation method from sum-of-the-years' digits to the straight-line method. The assets were purchased at the beginning of 2025 for $99.000 with an estimated useful life of 4 years and no salvage value. (The 2026 income statement contains depreciation expense of $29.700 on the assets purchased at the beginning of 2025) In 2026, the company discovered that the ending inventory for 2025 was overstated by $23,200; ending inventory for 2026 is correctly stated. Que Acco Que Accom

Answer rating: 100% (QA)

To prepare the revised retained earnings statement for 2025 and 2026 for Novak Inc we need to consid... View the full answer