Question - Presented below are the comparative statements for Pannebecker Inc. for the years 2009 and 2010.
|
2010
|
2009
|
|
Sales
|
$340,000
|
$270,000
|
|
Cost of sales
|
200,000
|
142,000
|
|
Gross profit
|
140,000
|
128,000
|
|
Expenses
|
88,000
|
50,000
|
|
Net income
|
$52,000
|
$78,000
|
|
|
|
|
Retained Earnings (Jan. 1)
|
$125,000
|
72,000
|
|
Net income
|
52,000
|
78,000
|
|
Dividends
|
(30,000)
|
(25,000)
|
|
Retained Earnings (Dec. 31)
|
$147,000
|
$125,000
|
The following additional information is provided:
1. In 2010, Pannebecker Inc. decided to switch its depreciation method from sum-of-the-years'-digits to the straight-line method. The assets were purchased at the beginning of 2009 for $90,000 with an estimated useful life of 4 years and no salvage value. (The 2010 income statement contains depreciation expense of $27,000 on the assets purchased at the beginning of 2009.)
2. In 2010, the company discovered that the ending inventory for 2009 was overstated by $20,000; ending inventory for 2010 is correctly stated.
Instructions - Complete the revised income and retained earnings statement for 2009 and 2010 assuming comparative statements. (Ignore income taxes.)