The Following Information Is Available for Reynolds Corporation: the Company

question 107

Essay

The following information is available for Reynolds Corporation: The company accountant, in preparing financial statements for the year ending December 31, 2014, has discovered the following information:
The company's previous bookkeeper, who has been fired, had recorded depreciation expense on a machine in 2012 and 2013 using the double diminishing-balance method of depreciation. The bookkeeper neglected to use the straight-line method of depreciation which is the company's policy. The cumulative effect of the error on prior years was $9,000. Depreciation was calculated by the straight-line method in 2014. Reynolds' average tax rate is 22%. During 2014, Reynolds declared and paid cash dividends of $80,000.
Instructions
a. Calculate the impact on retained earnings.
b. Prepare the statement of retained earnings for 2014.

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Definitions:

Collectivistic Cultures

Refers to societies or groups where people prioritize the needs and goals of the group over individual desires or ambitions.

Interdependent

This term describes a relationship between two or more elements in which each element depends on the others to some extent, indicating a mutual reliance.

Democratic Parents

A parenting style marked by offering warmth, structure, and guidance while allowing children a voice in decision-making.

Self-Esteem

One’s overall assessment of one’s worth as a person.