Week 5 Lee Corporation - Correction for depreciation error...

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Lee Corporation Statement of change in Owner’s Equity For the Year Ended December 31, 2007 Common stock Treasury stock Additional paid-in principle Shares outstanding Shares authorized Shares in Treasury Retrained earnings Other compreh ensive income Total Lee’s Equity Beginning balance 500 (200) 1,000 375,940 500,000 30,000 225,000 1,132,240 Correction for depreciatio n error (15,000) (15,000) Cumulative decrease in income: change in inventory method (21,000) (21,000) Net income 144,000 144,000 Less: dividends declared 100,000 100,000 Currency adjustment 18,105.6 0 18,105.60 Total Lee’s Equity 500 (200) 1,000 375,940 500,000 30,000 433,000 18,105.6 0 1,358,345.60
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This statement of changes in owner’s equity shows all of the changes in the Lee Corp’s equity for a specific length of time, in this case, from January 2007 to December 2007.
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Unformatted text preview: Correction for depreciation error: There was an understatement in 2005 resulting a tax saving of $10,000. • Cumulative decrease in income - change in inventory method and result in a tax saving of $14,000. Journal enteries for comprehensive income: Currency adjustment from acquiring the Canadian subsidiary (Exchange rates: CA ~> USD) 12/31/04 - .830979 > .026948 x 100,000 = $2,694.8 12/31/05 - .857927 >.000295 x 100,000 = $29.5 12/31/06 - .858222 >.153813 x 100,000 = $15,381.3 12/31/07 - 1.01204 Date Currency adjustments 12/31/05 $2,694.8 12/31/06 $29.5 12/31/07 $15,381.3 Total $18,105.6 This journal entry shows Lee’s currency adjustment from acquiring the Canadian subsidiary on 12/31/04 to 12/31/07 for an amount of $100,000 Canadian dollars....
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