During 2010, the Following Events and Transactions Were Incurred by Bernadette

Essay

During 2010, the following events and transactions were incurred by Bernadette Corporation.
·Bernadette discovered that prior year sales were understated by $175,000. Bernadette's customers have not paid for these sales, although Bernadette performed its services in 2009.
·Bernadette also discovered that $400,000 of research and development costs were capitalized in the prior period. These costs should have been expensed.
·A machine costing $50,000 was purchased on January 1, 2009. The machine was expected to have $0 salvage value at the end of its five-year life. However, the machine's cost was expensed rather than capitalized. Bernadette normally uses straight-line depreciation on its machines.
·The company declared a $200,000 cash dividend.
·Net income for 2010 was $500,000.
Bernadette's Retained Earnings account balance at December 31, 2009, was $570,000.
Required:
a. Prepare journal entries for these transactions. (Ignore any tax effects.)
b. Calculate Bernadette's retained earnings balance at December 31, 2010.