Problem:
The following information is based on 2006 account balances:
Total reported income since incorporation $1,500,000
Total cash dividends paid ($800,000)
Cumulative effect of changes in accounting principle ($120,000)
Total stock dividends distributed ($200,000)
Correction of an error, recorded Jan 1 2006 $66,000
What should be the balance of retained earnings at Dec 31, 2006?
a) 446,000
b) 500,000
c) 380,000
d) 566,000
Explain?