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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