Reference no: EM132624571

Question - Preparing a Statement of Stockholders' Equity with a Prior Period Error

In 2019, the first year of operations for Sprint Co., the company reported net income of $81,000 and declared and paid dividends of $25,200. No other items affected retained earnings in 2019. On December 31, 2019, the company had the following balances in stockholders' equity accounts (other than retained earnings): common stock, $180,000 credit balance; accumulated other comprehensive income, $9,000 debit balance. During 2020, the company reported net income of $158,400, declared and paid dividends of $36,000, and reported a foreign currency translation gain of $15,300 (after tax). Also in 2020, the company discovered that its 2019 depreciation expense was understated by $18,000 before taxes and the amount is material to the company. Assume a tax rate of 25%.

Required -

a. statement of stockholders' equity for Sprint Co. for the year ended December 31, 2020.

b. separate statement of retained earnings for the year ended December 31, 2020.