Required: a. Prepare a statement of changes in equity for the year 2022, starting with comparative information for 2021. The company's income tax rate is 20%. 3-7.At the beginning of 2020, the Caesars Palace Company madeP100,000 in expenditures that should have been recorded as anexpense immediately.However, the company erroneouslyrecorded this expenditure as a debit to the equipment accountand depreciated the same over 5 years, with no scrap valuebeing considered. The error was discovered in 2022 when thefinancial statements for 2021 had been issued.The company reported retained earnings at the end of 2020 ofP1,500,000. In 2021, the company reported a profit of P500,000and declared dividends of P200,000. Profit for 2022 (correctlystated) was P750,000, and dividends declared during the yearwere P500,000.The company's share capital remained unchanged at P2,000,000since December 31, 2021. There is no other shareholders' equityaccount except ordinary share capital and retained earnings.Required:Prepare a statement of changes in equity for the year 2022,starting with comparative information for 2021. The company'sincome tax rate is 20%.

Statement of Changes in Equity is the reconciliation between the opening balance and closing balance…

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Business

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Required:

a. Prepare a statement of changes in equity for the year 2022, starting with comparative information for 2021. The company's income tax rate is 20%.

3-7.
At the beginning of 2020, the Caesars Palace Company made
P100,000 in expenditures that should have been recorded as an
expense immediately.
However, the company erroneously
recorded this expenditure as a debit to the equipment account
and depreciated the same over 5 years, with no scrap value
being considered. The error was discovered in 2022 when the
financial statements for 2021 had been issued.
The company reported retained earnings at the end of 2020 of
P1,500,000. In 2021, the company reported a profit of P500,000
and declared dividends of P200,000. Profit for 2022 (correctly
stated) was P750,000, and dividends declared during the year
were P500,000.
The company's share capital remained unchanged at P2,000,000
since December 31, 2021. There is no other shareholders' equity
account except ordinary share capital and retained earnings.
Required:
Prepare a statement of changes in equity for the year 2022,
starting with comparative information for 2021. The company's
income tax rate is 20%.

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