Tuscan Inc. had a retained earnings balance of $60,000 at December 31, 2018. During the year, Tuscan had the following selected transactions. Calculate the retained earnings balance at December 31, 2019. ∙ Reported net income of $100,000. ∙ Revised an estimate of a machine’s salvage value. Depreciation increased by $1,000 per year. ∙ An error was discovered. Three years ago, a purchase of a building was incorrectly expensed. The effect is understated retained earnings of $12,000 (net of tax benefit). ∙ Paid cash dividends of $33,000.

Question

Tuscan Inc. had a retained earnings balance of $60,000 at December 31, 2018. During the year, Tuscan
had the following selected transactions. Calculate the retained earnings balance at December 31, 2019.
∙ Reported net income of $100,000.
∙ Revised an estimate of a machine’s salvage value. Depreciation increased by $1,000 per year.
∙ An error was discovered. Three years ago, a purchase of a building was incorrectly expensed. The
effect is understated retained earnings of $12,000 (net of tax benefit).
∙ Paid cash dividends of $33,000.

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