EverClean, Inc., a household products chain, reported a prior-period adjustment in 2016. An accounting error caused net income of 2015 to be overstated by $12 million. Retained earnings at December 31, 2015, as previously reported, was $345 million. Net income for 2016 was $99 million, and 2016 dividends declared were $65 million.
Requirement
1. Using the end-of-chapter summary problem as an example, prepare the company's statement of retained earnings for the year ended December 31, 2016. How does the prior-period adjustment affect EverClean's net income for 2016?