The following information is available for Zip Corporation: Retained Earnings, December 31, 2012 $1,500,000 Net Income for the year ended December 31, 2013 $ 200,000 The company accountant, in preparing financial statements for the year ending December 31, 2013, has discovered the following information: The company's previous bookkeeper, who has been fired, had recorded depreciation expense on equipment in 2011 and 2012 using the double-declining-balance method of depreciation

Subject:AccountingPrice:2.84 Bought3

Share With

The following information is available for Zip Corporation:
Retained Earnings, December 31, 2012 $1,500,000
Net Income for the year ended December 31, 2013 $ 200,000

The company accountant, in preparing financial statements for the year ending December 31, 2013, has
discovered the following information:
The company's previous bookkeeper, who has been fired, had recorded depreciation expense on equipment
in 2011 and 2012 using the double-declining-balance method of depreciation. The bookkeeper neglected to
use the straight-line method of depreciation which is the company's policy. The cumulative effects of the error
on prior years was $25,000, ignoring income taxes. Depreciation was computed by the straight-line method
in 2013.
Instructions
(a) Prepare the entry for the prior period adjustment.
(b) Prepare the retained earnings statement for 2013.