Malahat Manufacturing Ltd. (Malahat), a publicly traded corporation, is preparing the financial statements for its June 30, Year 2, year end. In following up on an unexpected change in its gross profit, Malahat determined that inventory was overstated by $120,000 when the financial statements for June 30, Year 1, were prepared. Malahat offers a warranty on its products. A new product was introduced during fiscal Year 1, and during the current year the actual warranty costs incurred for the new product are significantly greater than estimated. Management has determined that the warranty accrual in fiscal Year 1 was understated by $204,000. Malahat's income tax rate is 40%. 

What adjustments is required for opening retained earnings?  

Answer rating: 100% (QA)

The adjustments required for opening retained earnings woul... View the full answer