The following information is available for Xavier Corporation: $\begin{array}{llr}
\text { Retained Earnings, December 31, 2016 } &\$1,500,000\
\text { Net Income for the vear ended December 31, 2017 } &\$200,000\
\end{array}$
The company accountant in preparing financial statements for the year ending December 31 2017 has discovered the following information:
The company's previous bookkeeper who has been fired had recorded depreciation expense on equipment in 2015 and 2016 using the double-declining-balance method of depreciation. The bookkeeper neglected to use the straight-line method of depreciation which is the company's policy. The cumulative effects of the error on prior years was $25000 ignoring income taxes. Depreciation was computed by the straight-line method in 2017.
Instructions
(a) Prepare the entry for the prior period adjustment.
(b) Prepare the retained earnings statement for 2017.

Question

The following information is available for Xavier Corporation: $\begin{array}{llr}
  \text { Retained Earnings, December 31, 2016 } &\$1,500,000\
 \text { Net Income for the vear ended December 31, 2017 } &\$200,000\
\end{array}$
 The company accountant in preparing financial statements for the year ending December 31 2017 has discovered the following information:
The company's previous bookkeeper who has been fired had recorded depreciation expense on equipment in 2015 and 2016 using the double-declining-balance method of depreciation. The bookkeeper neglected to use the straight-line method of depreciation which is the company's policy. The cumulative effects of the error on prior years was $25000 ignoring income taxes. Depreciation was computed by the straight-line method in 2017.
Instructions
(a) Prepare the entry for the prior period adjustment.
(b) Prepare the retained earnings statement for 2017.

Quizplus · Accepted Answer

The Answer of The following information is available for Xavier Corporation: $\begin{array}{llr}
  \text { Retained Earnings, December 31, 2016 } &\$1,500,000\
 \text { Net Income for the vear ended December 31, 2017 } &\$200,000\
\end{array}$
 The company accountant in preparing financial statements for the year ending December 31 2017 has discovered the following information:
The company's previous bookkeeper who has been fired had recorded depreciation expense on equipment in 2015 and 2016 using the double-declining-balance method of depreciation. The bookkeeper neglected to use the straight-line method of depreciation which is the company's policy. The cumulative effects of the error on prior years was $25000 ignoring income taxes. Depreciation was computed by the straight-line method in 2017.
Instructions
(a) Prepare the entry for the prior period adjustment.
(b) Prepare the retained earnings statement for 2017.

The Following Information Is Available for Xavier Corporation The Company Accountant in Preparing Financial Statements for the Year