Lee Corporation Equity Act 545

Only available on StudyMode
  • Download(s) : 171
  • Published : September 18, 2011
Open Document
Text Preview
Lee Corporation Equity Scenario
 
• Review the following information:
 
Lee Corporation, a U.S. company, began operations on January 1, 2004. During its first 3 years of operations, Lee reported net income and declared dividends as follows.  
Net income                           Dividends declared 2004                       $ 40,000                                                $ –0– 2005                       125,000                                                                 50,000 2006                       160,000                                                                 50,000  

The following information relates to 2007:
 
Income before income tax $240,000
Prior period adjustment: understatement of 2005 depreciation expense (before taxes) $ 25,000 Cumulative decrease in income from change in inventory methods (before taxes) $ 35,000 Dividends declared (of this amount, $25,000 will be paid on January 15, 2008) $100,000 Effective tax rate 40%

 
|Lee Corporation | |Retained Earnings Statement | |For the Year Ended December 31, 2007 | |Balance, January 1, as |  |$225,000* | |reported....................................................................................| | | |. | | | |Correction for depreciation error (net of $10,000...
tracking img