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Problem 4-6 Below is the Retained Earnings account for the year 2017 for Pronghorn Corp. Retained...

Problem 4-6

Below is the Retained Earnings account for the year 2017 for Pronghorn Corp.

Retained earnings, January 1, 2017

$265,330
Add:
   Gain on sale of investments (net of tax)

$48,930
   Net income

92,230
   Refund on litigation with government, related to the year 2014 (net of tax)

29,330
   Recognition of income earned in 2016, but omitted from income
     statement in that year (net of tax)

33,130

203,620

468,950
Deduct:
   Loss on discontinued operations (net of tax)

42,730
   Write-off of goodwill (net of tax)

67,730
   Cumulative effect on income of prior years in changing from
     LIFO to FIFO inventory valuation in 2017 (net of tax)

30,930
   Cash dividends declared

39,730

181,120
Retained earnings, December 31, 2017

$287,830


(a) Prepare a corrected retained earnings statement. Pronghorn Corp. normally sells investments of the type mentioned above. FIFO inventory was used in 2017 to compute net income. (List items that increase adjusted retained earnings first.)

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ekkarill92 answered 2 years ago
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