Patterson Company Failed to Adjust for a $600,000 Actual Loss

question 64

Multiple Choice

Patterson Company failed to adjust for a $600,000 actual loss on pension plan assets in 2018, resulting in an underfunded pension plan. Patterson's tax rate is 30%. As result of this error, retained earnings would be:

• A) Unaffected.
• B) Overstated by $60,000.
• C) Overstated by $42,000.
• D) Overstated by $18,000.

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