tuscan incorporated had a retained earnings balance of $70,000 at december 31 of the prior year. in the…

tuscan incorporated had a retained earnings balance of $70,000 at december 31 of the prior year. in the current year, tuscan reported the following results.\n• reported net income of $110,000.\n• cash dividends of $43,000 declared and paid.\n• tuscan discovered this year that it made a math error three years ago; to correct for this, $22,000 (net of tax) must be added to the current years beginning retained earnings balance.\n• revised an estimate of a machines salvage value. depreciation increased by $2,000 per year.\ncalculate the retained earnings balance at december 31 of the current year.\nnote: amounts to be deducted should be indicated with a minus sign.\ntuscan incorporated\nstatement of retained earnings\nfor current year ended december 31\nprior period adjustment

tuscan incorporated had a retained earnings balance of $70,000 at december 31 of the prior year. in the current year, tuscan reported the following results.\n• reported net income of $110,000.\n• cash dividends of $43,000 declared and paid.\n• tuscan discovered this year that it made a math error three years ago; to correct for this, $22,000 (net of tax) must be added to the current years beginning retained earnings balance.\n• revised an estimate of a machines salvage value. depreciation increased by $2,000 per year.\ncalculate the retained earnings balance at december 31 of the current year.\nnote: amounts to be deducted should be indicated with a minus sign.\ntuscan incorporated\nstatement of retained earnings\nfor current year ended december 31\nprior period adjustment

Answer

Explanation:

Step1: Calculate the adjusted beginning retained earnings

The beginning retained earnings balance was $70,000. A prior - period adjustment (due to the math error) of $22,000 is added. [70000 + 22000=92000]

Step2: Add net income

Net income is $110,000. So, [92000+110000 = 202000]

Step3: Deduct cash dividends

Cash dividends of $43,000 are deducted. [202000-43000=159000]

Step4: Consider the depreciation change (no - effect on retained earnings for prior periods)

A change in depreciation estimate (revised salvage value) is a change in accounting estimate. It affects future periods' income, not retained earnings of prior periods. So, it has no impact on the calculation of the ending retained earnings balance for the current year based on the information given (since we are calculating the balance and the change in depreciation affects current and future income, not the retained earnings balance calculation in the way of prior - period or dividend/net - income - like adjustments).

Answer:

(159000)