The Income Statement for Hudson Company Reported Net Income of $345,000

question 20

Essay

The income statement for Hudson Company reported net income of $345,000 for the year ended December 31, 2012 before considering the following:
During the year the company purchased trading securities. At year end, the fair value of the investment portfolio was $23,000 less than cost.
The balance of retained earnings was $823,000 on December 31, 2011. Hudson Company paid $43,000 in cash dividends in 2012. Calculate the balance of retained earnings on December 31, 2012.

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Definitions:

Manufacturing Overhead

Indirect costs attributed to the production process, including costs associated with maintaining the manufacturing facilities.

Overapplied

A situation where the allocated or applied costs in cost accounting exceed the actual costs incurred.

Underapplied

A term used in accounting when the allocated costs are less than the actual costs incurred.

Manufacturing Overhead

All indirect costs associated with the production process, including but not limited to utilities, maintenance, and depreciation on equipment.