Lee Equity

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Lee Corporation Equity Scenario
Income B-4 Taxes Tax Expense (40%) Net Income
240,000 96,000 144,000
NOTE: adjustments to error corrections are always after tax (AT). JE’s needed: DR Retained Earnings Accumulated Depreciation 15,000 15,000 CR Retained Earnings Inventory
21,000 21,000
Dividends (Retained Earnings) Cash Dividends Payable
100,000 75,000 25,000
Lee Corporation Retained Earnings Statement for the year ended December 31, 2007 January 1, as reported Correction for depreciation error (net of $10,000 tax) Cumulative decrease in income from change in inventory methods (net of $14,000 tax) Balance, January 1, as adjusted Add: Net income $ 225,000 (15,000) (21,000) $ 189,000 144,000 $ 333,000 (100,000) 233,000

Less: Dividends declared Balance, December 31
Part #2: 200412-31 200512-30 Canadian December 31, Friday December 30, Friday 0.830979 USD 0.857927 USD 2006- December 29, 0.858222 12-29 Friday USD 2007-12-31 December 31, Monday 1.01204 USD ** Foreign Currency Translation

Year 2004 2005 2006 2007
Amount in US$ 100,000.00 103,780.00 100,040.00 82,290.00
Adjustment 0 3,780.00 40.00 (17,710)
Factor (US) 1.2034** 1.1656 1.1652 0.9881
Rounding and with 4 decimal places.
**Notice that a Canadian dollar buys only .830979 cents of US dollar. Hence, to get what $1 buys in Canadian dollars you need to go from the Direct vs indirect quote: === 1.2034 = .1/.83098. The difference between rates will determine the gain/loss.
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