The Following Information Is Available for Reynolds Corporation: the Company

Essay

The following information is available for Reynolds Corporation: The company accountant, in preparing financial statements for the year ending December 31, 2021, has discovered the following information:
The company's previous bookkeeper, who has been fired, had recorded depreciation expense on a machine in 2019 and 2020 using the double diminishing-balance method of depreciation. The bookkeeper neglected to use the straight-line method of depreciation which is the company's policy. The cumulative effect of the error on prior years was $ 9,000. Depreciation was calculated by the straight-line method in 2021. Reynolds' average tax rate is 22%. During 2021, Reynolds declared and paid cash dividends of $ 80,000.
Instructions
a) Calculate the impact on retained earnings.
b) Prepare the statement of retained earnings for 2021.