On January 2, 2014, Cain, Inc. agreed to pay its newly hired chief financial officer\ $550,000 under a deferred compensation arrangement. Cain should have recorded this\ expense in its income statement for the year ended December 31, 2014 but did not do\ so. Cains reported income tax expense would have been $125,000 lower in 2014 had\ the company properly accrued this deferred compensation.\ In its December 31, 2015 financial statements, by what amount should Cain adjust the\ beginning balance of retained earnings (further note if retained earnings should be\ debited or credited)?

Answer rating: 100% (QA)

Absolutely Cain Inc needs to adjust the beginning balance of retained earnings in its Decemb... View the full answer