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C Co. reported a retained earnings balance of $200,000 at December 31, 2017. In September 2018, C determined that insurance premiums of $30,000 for the three-year period beginning January 1, 2017, had been paid and fully expensed in 2017. C has a 30% income tax rate. What amount should C report as adjusted beginning retained earnings in its 2018 statement of retained earnings

Respuesta :

Answer:

$214,000

Explanation:

The computation of the amount that report as adjusted opening retained earning is shown below:

Per year insurance premium is

= $30,000 ÷ 3 years

= $10,000

Now the beginning retained earning would be understated by

= ($30,000 - $10,000) - ($200,000 × 30%)

= $20,000 - $6,000

= $14,000

Now the amount adjusted is

= $200,000 + $14,000

= $214,000

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