Tuscan Incorporated had a retained earnings balance of $60,000 at December 31 of the prior year. In the current year, Tuscan reported the following results. • Reported net income of $100,000. . • Cash dividends of $33,000 declared and paid. • Tuscan discovered this year that it made a math error three years ago; to correct for this, $12,000 (net of tax) must be addec the current year's beginning retained earnings balance. • Revised an estimate of a machine's salvage value. Depreciation increased by $1,000 per year. . Calculate the retained earnings balance at December 31 of the current year. Note: Amounts to be deducted should be indicated with a minus sign. TUSCAN INCORPORATED Statement of Retained Earnings For Current Year Ended December 31 Retained earnings, December 31, prior year, as previously reported Prior period adjustment $ $ 60,000 60,000 60,000

Tuscan Incorporated had a retained earnings balance of $60,000 at December 31 of the prior year. In the current year, Tuscan reported the following results. • Reported net income of $100,000. . • Cash dividends of $33,000 declared and paid. • Tuscan discovered this year that it made a math error three years ago; to correct for this, $12,000 (net of tax) must be addec the current year's beginning retained earnings balance. • Revised an estimate of a machine's salvage value. Depreciation increased by $1,000 per year. . Calculate the retained earnings balance at December 31 of the current year. Note: Amounts to be deducted should be indicated with a minus sign. TUSCAN INCORPORATED Statement of Retained Earnings For Current Year Ended December 31 Retained earnings, December 31, prior year, as previously reported Prior period adjustment $ $ 60,000 60,000 60,000

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter2: Financial Statements, Cash Flow,and Taxes

Section: Chapter Questions

Problem 19P: The Bookbinder Company had 500,000 cumulative operating losses prior to the beginning of last year....

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The Bookbinder Company had 500,000 cumulative operating losses prior to the beginning of last year. It had 100,000 in pre-tax earnings last year before using the past operating losses and has 300,000 in the current year before using any past operating losses. It projects 350,000 pre-tax earnings next year. a. How much taxable income was there last year? How much, if any, cumulative losses remained at the end of the last year? b. What is the taxable income in the current year? How much, if any, cumulative losses remain at the end of the current year? c. What is the projected taxable income for next year? How much, if any, cumulative losses are projected to remain at the end of next year?
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