The Samba Company, During 2010, Reported Net Income on Its

question 13

Essay

The Samba Company, during 2010, reported net income on its income statement of $90, 000.There were 8, 000 shares of common stock outstanding during the entire year, and a $5 per-share dividend was declared on November 21, 2010.During the year, it was discovered that depreciation of $50, 000 was overstated in 2008 on some production equipment.The retained earnings balance on January 1, 2010 was $300, 000, and the income tax rate on all items of income is 40%.
Required:
Prepare a retained earnings statement for the year ended December 31, 2010.

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Definitions:

Power of the Test

The probability that the test correctly rejects a false null hypothesis, effectively detecting an effect when there is one.

Normally Distributed

A probability distribution that demonstrates symmetry around its mean, indicating that occurrences diminish as distance from the mean increases.

Probability

The quantification of the chance of an event happening, represented as a numerical value ranging from 0 to 1.

Test Statistic

A standardized value that is calculated from sample data during a hypothesis test. It is used to determine whether to reject the null hypothesis.