Brooks Company reported a prior period adjustment of $12,000 in pretax financial “income” and taxable income for 2020. The prior period adjustment was the result of an error in calculating bad debt expense for 2019. The current tax rate is 30%, and no change in the tax rate has been enacted for future years. When the company applies intraperiod income tax allocation, the prior period adjustment will be shown on the:
a. Income statement at $12,000
b. Income statement at $8,400 (net of $3,600 income taxes)
c. Retained earnings statement at $12,000
d. Retained earnings statement at $8,400 (net of $3,600 income taxes)