Black Bulls Company reported a Retained Earnings balance of P150,000 on December 31, 2014. The following occurred during 2015:Net income was P85,000Dividends declared and paid was P60,000An error on the 2013 depreciation expense revealed understatement of P25,000. Tax rate is 25%.How much should be presented as the correct beginning balance of the Retained Earnings account for 2022?How much should be presented as the ending balance of the Retained Earnings account for 2022?

Depreciation expense net of tax = Depreciation expense x (1 - tax rate) = 25000 * (1-0.25) = P18,750

Answered: Black Bulls Company reported a Retained…

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter18: Accounting For Income Taxes

Section: Chapter Questions

Problem 9MC: Brooks Company reported a prior period adjustment of 512,000 in pretax financial "income" and...

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Black Bulls Company reported a Retained Earnings balance of P150,000 on December 31, 2014. The following occurred during 2015:

Net income was P85,000
Dividends declared and paid was P60,000
An error on the 2013 depreciation expense revealed understatement of P25,000. Tax rate is 25%.

How much should be presented as the correct beginning balance of the Retained Earnings account for 2022?
How much should be presented as the ending balance of the Retained Earnings account for 2022?

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