Use the Following Information for Questions for Pear Limited, Events

question 88

Multiple Choice

Use the following information for questions For Pear Limited, events and transactions during 2015 included the following.The tax rate for all items is 30%. 1) Depreciation for 2014 was found to be understated by $30,000. 2) A strike by the employees of a supplier resulted in a loss of $20,000. 3) The inventory at December 31, 2013 was overstated by $40,000. 4) A flood destroyed a building that had a book value of $400,000.Floods are very uncommon in that area.
-The effect of these events and transactions on the balance of retained earnings at January 1, 2015 would be

• A)$14,000.
• B)$21,000.
• C)$294,000.
• D)$343,000.

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Definitions:

Cost Of Goods Manufactured

The total production cost of goods completed during a specific period.

Work In Process Inventory

Inventory that consists of items in the production process but not yet completed, considered a current asset on the balance sheet.

Process Cost Summary

A report detailing the costs associated with each stage of the production process, summarizing the total expense of converting raw materials into finished products.

Reporting Period

The specific time frame covered by financial statements or reports, typically a quarter or a year.