Below is the retained earnings account for the year 2008 for LeClair Corp.

Instructions

(a) Prepare a corrected retained earnings statement. LeClair Corp. normally sells investments of the type mentioned above. FIFO inventory was used in 2008 to compute net income.

(b) State where the items that do not appear in the corrected retained earnings statement should be shown.

Transcribed Image Text:

Retained earnings, January 1, 2008 $257,600 Add: Gain on sale of investments (net of tax) $41,200 Net income 84,500 Refund on litigation with government, related to the year 2005 (net of tax) Recognition of income earned in 2007, but omitted from income statement in that year (net of tax) 21,600 25,400 172,700 430,300 Deduct: Loss on discontinued operations (net of tax) Write-off of goodwill (net of tax) Cumulative effect on income of prior years in changing from LIFO to FIFO inventory valuation in 2008 (net of tax) 25,000 60,000 18,200 Cash dividends declared 32,000 135,200 Retained earnings, December 31, 2008 $295,100