Alexander Company Reported the Ending Balance of Retained Earnings as $400

question 46

Multiple Choice

Alexander Company reported the ending balance of Retained earnings as $400 000 on 31 December 2013. During the first month of 2014, they discovered an error in the ledger which had the effect of overstating profit in 2013 by $45 000. At the end of 2014, they included this item as a prior period adjustment. Year 2014 results included $52 000 of profit and $15 000 of dividends paid. What amount would be shown as the ending balance of Retained earnings on the 31 December 2014 financial statements?

• A)$347 000
• B)$437 000
• C)$392 000
• D)$430 000

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Definitions:

Stock Dividend

A distribution of additional shares to the existing shareholders of a company, proportionate to their current shareholding.

Ratification

Ratification is the act of officially approving or confirming a decision or agreement, often used in the context of treaties, contracts, or other legal documents.

Authorized Act

An action taken by an individual or entity that has been given official permission or power to do so, typically within a legal or organizational context.

Corporation's Acceptance

The formal agreement by a corporation to abide by legal obligations or contracts, often signified through a resolution by its board of directors.