Use the Following Information for the Following Questions

question 76

Multiple Choice

Use the following information for the following questions:
The tax rate for all items is 30%.
1. Depreciation for 2019 was found to be understated by $30,000.
2. A 2020 strike by the employees of a supplier resulted in a loss of $20,000.
3. The inventory at December 31, 2018 was overstated by $40,000.
4. A 2020 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, 2020 would be

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

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Definitions:

Period Cost

Period costs are expenses that are not directly tied to the production process and are expensed in the period they are incurred, such as administrative and selling expenses.

VP of Sales

A top executive responsible for leading the sales department, developing sales strategies, and driving revenue growth for an organization.

Overhead Allocated

The portion of indirect costs assigned to a specific project or production process, often based on predetermined rates or actual expenses.

Period Costs

Expenses that are not directly tied to the production of goods and are expensed in the period they are incurred.