Before issuing the report for the year ended you

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Before issuing the report for the year ended December 31, 2014, you discover a $50,000 error (net of tax) that caused 2013 inventory to be overstated. Would this discovery have any impact on the reporting of the Statement of Retained Earnings for 2014? Retained Earnings StatementRetained Earnings StatementLO 7 Prepare a retained earnings statement.
4-46Woods, Inc.Statement of Retained EarningsFor the Year Ended December 31, 2014Balance, January 11,050,000$ Prior period adjustment - error correction(50,000)Balance, January 1 (restated)1,000,000Net income360,000Dividends(300,000)Balance, December 311,060,000$ LO 7 Prepare a retained earnings statement.Retained Earnings StatementRetained Earnings StatementAdvance slide in presentation mode to reveal answers.
4-47Restrictions on Retained EarningsDisclosedIn notes to the financial statements.As Appropriated Retained Earnings.LO 7 Prepare a retained earnings statement.Retained Earnings StatementRetained Earnings Statement
4-48All changes in equity during a period except those resulting from investments by owners and distributions to owners. Includes: all revenues and gains, expenses and losses reported in net income, and all gains and losses that bypass net income but affect stockholders’ equity.Other Reporting IssuesOther Reporting IssuesLO 8 Explain how to report other comprehensive income.Comprehensive Income
4-49Other Comprehensive IncomeUnrealized gains and losses on available-for-sale securities.Translation gains and losses on foreign currency.Plus others+Reported in Stockholders’ EquityLO 8 Explain how to report other comprehensive income.Net IncomeComprehensive IncomeComprehensive Income
4-50Gains and losses that bypass net income but affect stockholders' equity are referred to as QuestionComprehensive IncomeComprehensive Income
LO 8 Explain how to report other comprehensive income.
4-51BE4-11.On January 1, 2017, Richards Inc. had cash and common stock of $60,000. At that date, the company had no other asset, liability, or equity balances. On January 2, 2017, it purchased for cash $20,000 of debt securities that it classified as available-for-sale. It received interest of $3,000 during the year on these securities. In addition, it has an unrealized holding gain on these securities of $4,000 net of tax. Determine the following amounts for 2017: (a) net income, (b) comprehensive income, (c) other comprehensive income, and (d) accumulated other comprehensive income (end of 2017).
4-52Companies must display the components of other comprehensive income in one of two ways:1.A single continuous statement (one statement approach) or 2.two separate, but consecutive statements of net income and other comprehensive income (two statement approach).LO 8 Explain how to report other comprehensive income.Comprehensive IncomeComprehensive Income
4-53One Statement ApproachComprehensive IncomeComprehensive IncomeLO 8 Explain how to report other comprehensive income.Illustration 4-24Advantage– does not require the creation of a new financial statement.Disadvantage- net income buried as a subtotal on the statement.
4-54Illustration 4-19Two Statement ApproachComprehensive IncomeComprehensive IncomeIllustration 4-25
4-55Reports the changes in each stockholders’ equity account and total equity for the period.

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