On July 9, 2021, Silver Fox Enterprises Inc. discovered it had recorded the $75,000 purchase of land as legal expense on November 8, 2020. The company had reported retained earnings of $573,500 at its previous year end, December 31, 2020. During 2021, Silver Fox had profi t of $193,000 and it declared and paid cash dividends of $216,000. Silver Fox has a 25% income tax rate.

Instructions

a. Prepare the journal entry to correct the error.

b. Assuming the company reports under ASPE, prepare a statement of retained earnings.