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Prepare the entry to correct the error

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Reference no: EM132771282

Question - In 2019, Dalia Corp, a calendar fiscal-year company, discovered that depreciation expense was erroneously overstated by $67,000 in both 2017 and 2018 for financial reporting purposes. Net income in 2019 is correct. The tax rate is 25%. The error was made only for financial reporting, affecting depreciation and deferred incometax accounts. CCA has been recorded correctly, and thus there will be no change in taxes payable.

Additional information:

2018 2017

Beginning retained earnings 454,000 430,400

Earnings (with error in 2015) 85,400 95,900

Dividends declared 62,200 72,300

REQUIRED -

a) Prepare the entry in 2019 to correct the error.

b) Prepare the comparative retained earnings section of the statement of changes in shareholders' equity for 2018 and 2019, reflecting the change.

Reference no: EM132771282

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