ZuZume Corp. had a balance of $ 100,000 in its Retained Earnings on January 1, 2016. How much is:
a. Adjusted RE on January 1, 2016
b. Balance in RE on December 31, 2016
You are given the following information:
1. Sales: $ 1,000,000; COGS $ 700,000; Selling expenses $ 100,000; Administrative expenses $ 80,000; Dividend Revenue $ 5,000; Interest expense $ 15,000
2. Dividends of $ 25,000 were declared this year; $ 20,000 will be paid this year
3. Depreciation expense was understated by $ 15,000 in 2014
4. ZuZume changed inventory methods from weighted average to FIFO in 2016. As a result, COGS was $ 8,000 higher in 2014 and $ 7,000 higher in 2015.
5. In 2014, ZuZume purchased equipment of $ 75,000 and charged it by mistake to operating expense. The asset had a life of 10 years and a salvage value of $ 15,000
6. The tax rate is 20%