Scobie Company began 2016 with a retained earnings balance of $142,400. During an examination of its...

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Scobie Company began 2016 with a retained earnings balance of$142,400. During an examination of its accounting records onDecember 31, 2016, Scobie found it had made the following materialerrors, for both financial reporting and income tax reporting,during 2015.
1. Depreciation expense of $15,000 inadvertently had been recordedtwice for the same machine.
2. No accrual had been made at year-end for interest; therefore,interest expense had been understated by $4,000.
Scobie’s net income after taxes during 2016 was $60,000. Thecompany has been subject to a 30% income tax rate for the pastseveral years. It declared and paid dividends of $13,000 during2016.
Required:
1. Prepare whatever journal entries in 2016 are necessary tocorrect Scobie’s books for its previous errors. Make yourcorrections directly to the Retained Earnings account.
2. Prepare the statement of retained earnings for 2016.
General Journal
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Prepare whatever journal entries are necessary to correctScobie’s books for its previous errors. Make your correctionsdirectly to the Retained Earnings account on December 31.Additional Instructions
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PAGE 1
GENERAL JOURNAL
Score: 82/101
DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT
1
?
?
?
2
?
?
3
?
?
?
4
?
?
5
?
6
?
7
?
?
8
Points:
16.24 / 20
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To correct a prior period that has been closed, adjust the bookvalues of the assets and liabilities so that their balances reflectthe correct amounts. An offsetting adjustment is made to RetainedEarnings for the cumulative effect of the adjustments for priorperiods. In this problem you are instructed to record two entriesrather than a compound entry so your journal should contain fourentries for this problem.
Balance Sheet
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Prepare Scobie Company’s Statement of Retained Earnings for theyear ended December 31, 2016. Additional Instructions
Score: 4/31
SCOBIE COMPANY
Statement of Retained Earnings
For Year Ended December 31, 2016
1
Retained Earnings, as Previously Reported, January 1, 2016
?
2
Prior Period Adjustments:
3
Correction of Overstatement in 2015 Depreciation
4
Correction of Understatement in 2015 Interest
5
Adjusted Retained Earnings, January 1, 2016
6
Add: Net income
7
8
Less: Cash Dividends
9
Retained Earnings, December 31, 2016

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Solution Scobie Company Journal Entries to correct Scobies books for its previous errors Scobie Company Journal Entries Date Account Titles and Explanation Ref No Debit Credit 31Dec See Answer

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1.	Depreciation expense of $15,000 inadvertently had been recordedtwice for the same machine.
2.	No accrual had been made at year-end for interest; therefore,interest expense had been understated by $4,000.

1.	Prepare whatever journal entries in 2016 are necessary tocorrect Scobie’s books for its previous errors. Make yourcorrections directly to the Retained Earnings account.
2.	Prepare the statement of retained earnings for 2016.

1	Retained Earnings, as Previously Reported, January 1, 2016	?
2	Prior Period Adjustments:
3	Correction of Overstatement in 2015 Depreciation
4	Correction of Understatement in 2015 Interest
5	Adjusted Retained Earnings, January 1, 2016
6	Add: Net income
7
8	Less: Cash Dividends
9	Retained Earnings, December 31, 2016