This preview shows page 1. Sign up to view the full content.
Unformatted text preview: The company's income tax rate is 30%. Stearns changed its method of accounting for inventory at the beginning of 20X7. The cost of goods sold of $3,200,000 is based on the new method. Cumulatively, prior years' income would have been $2,400,000 higher (net of tax effects) had the new method been in use all along. The company discovered an error in a prior year's report. The error resulted in a $420,000 overstatement of 20X5 net income. (a) Prepare the 20X7 income statement for Stearns Corporation. (b) Retained earnings at January 1, 20X7, was $5,500,000, before giving consideration to the correction of error or accounting change described above. What is the balance of the revised beginning retained earnings? (c) The company had $400,000 of other comprehensive income (net of any tax effects) related to holding gains on available for sale securities. How much is total "comprehensive income?"...
View Full Document
This note was uploaded on 02/29/2012 for the course ACCOUNTING 101 taught by Professor Hudack during the Spring '11 term at FIU.
- Spring '11