Eagle Corp. is a calendar-year corporation whose financial statements for 2019 and 2020 included errors as follows: Assume that purchases were recorded correctly and that no correcting entries were made at December 31, 2019 or December 31, 2020. Ignoring income taxes, by how much should Eagle's retained earnings be retrospectively adjusted at January 1, 2021?
A) $ 32,000 increase
B) $ 8,000 increase
C) $ 4,000 decrease
D) $ 2,000 increase

Question

Eagle Corp. is a calendar-year corporation whose financial statements for 2019 and 2020 included errors as follows:  Assume that purchases were recorded correctly and that no correcting entries were made at December 31, 2019 or December 31, 2020. Ignoring income taxes, by how much should Eagle's retained earnings be retrospectively adjusted at January 1, 2021?
A) $ 32,000 increase 
B) $ 8,000 increase 
C) $ 4,000 decrease 
D) $ 2,000 increase

Quizplus · Accepted Answer

The Answer of Eagle Corp. is a calendar-year corporation whose financial statements for 2019 and 2020 included errors as follows:  Assume that purchases were recorded correctly and that no correcting entries were made at December 31, 2019 or December 31, 2020. Ignoring income taxes, by how much should Eagle's retained earnings be retrospectively adjusted at January 1, 2021?
A) $ 32,000 increase 
B) $ 8,000 increase 
C) $ 4,000 decrease 
D) $ 2,000 increase