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    Ending retained earnings with error correction

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    Companys current year was $15,000(retained earnings) an error made the prior year was corrected for $3,000 which was the depreciation expense on equipment. During the current year they also earned net income of $10,000 and declared cash dividends of $4,000. Compute the year end retained earnings balance.

    Do I add the retained earnings+net income+dividends and subtract the depreciation expense?

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    If the depreciation expense was not recorded for last year, the ...

    Solution Summary

    The solution explains how to calculated the ending retained earnings if there was an error in the previous years and there is net income and dividends paid in the current year