On January 1, 2021, Fyre Lite Corporation had retained earnings of $650,000. During the year, Fyre Lite

Question:

On January 1, 2021, Fyre Lite Corporation had retained earnings of $650,000. During the year, Fyre Lite had the following selected transactions:

1. Declared and paid cash dividends, $245,000.

2. Earned profit before income tax, $750,000.

3. Corrected a prior period error of $85,000, before income tax, which resulted in an understatement of profit in 2020.

4. Reacquired 25,000 common shares for $50,000 more than the original issue price. This was the first time the company had ever reacquired its own shares.

5. Completed a 3-for-1 stock split of the common shares.

Fyre Lite has a 25% income tax rate and reports under ASPE.

Instructions

Prepare a statement of retained earnings for the year ended December 31, 2021.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...

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