Question

Presented below are the comparative income and retained earnings statements for Pina Inc. for the years 2025 and 2026. 2026 2025 Sales $316,000 $272,000 Cost of sales 185,000 143,000 Gross profit 131,000 129,000 Expenses 94,600 48,700 Net income $36,400 $80,300 Retained earnings (Jan. 1) $128,600 $75,700 Net income 36,400 80,300 Dividends (31,800) (27,400) Retained earnings (Dec. 31) $133,200 $128,600 The following additional information is provided: 1. In 2026, Pina Inc. decided to switch its depreciation method from sum-of-the-years' digits to the straight-line method. The assets were purchased at the beginning of 2025 for $91,500 with an estimated useful life of 4 years and no salvage value. (The 2026 income statement contains depreciation expense of $27,450 on the assets purchased at the beginning of 2025.) 2. In 2026, the company discovered that the ending inventory for 2025 was overstated by $22,000; ending inventory for 2026 is correctly stated. Prepare the revised retained earnings statement for 2025 and 2026, assuming comparative statements. (Ignore income taxes.) PINA INC. Retained Earnings Statement

          Presented below are the comparative income and retained earnings statements for Pina Inc. for the years 2025 and 2026.
2026
2025
Sales
$316,000
$272,000
Cost of sales
185,000
143,000
Gross profit
131,000
129,000
Expenses
94,600
48,700
Net income
$36,400
$80,300
Retained earnings (Jan. 1)
$128,600
$75,700
Net income
36,400
80,300
Dividends
(31,800)
(27,400)
Retained earnings (Dec. 31)
$133,200
$128,600
The following additional information is provided:
1.
In 2026, Pina Inc. decided to switch its depreciation method from sum-of-the-years' digits to the straight-line method. The
assets were purchased at the beginning of 2025 for $91,500 with an estimated useful life of 4 years and no salvage value.
(The 2026 income statement contains depreciation expense of $27,450 on the assets purchased at the beginning of 2025.)
2.
In 2026, the company discovered that the ending inventory for 2025 was overstated by $22,000; ending inventory for 2026
is correctly stated.
Prepare the revised retained earnings statement for 2025 and 2026, assuming comparative statements. (Ignore income taxes.)
PINA INC.
Retained Earnings Statement

Presented below are the comparative income and retained earnings statements for Pina Inc. for the years 2025 and 2026.
2026
2025
Sales
316,000272,000
Cost of sales
185,000
143,000
Gross profit
131,000
129,000
Expenses
94,600
48,700
Net income
36,40080,300
Retained earnings (Jan. 1)
128,60075,700
Net income
36,400
80,300
Dividends
(31,800)
(27,400)
Retained earnings (Dec. 31)
133,200128,600
The following additional information is provided:
1.
In 2026, Pina Inc. decided to switch its depreciation method from sum-of-the-years' digits to the straight-line method. The
assets were purchased at the beginning of 2025 for 91,500 with an estimated useful life of 4 years and no salvage value.
(The 2026 income statement contains depreciation expense of27,450 on the assets purchased at the beginning of 2025.)
2.
In 2026, the company discovered that the ending inventory for 2025 was overstated by 22,000; ending inventory for 2026
is correctly stated.
Prepare the revised retained earnings statement for 2025 and 2026, assuming comparative statements. (Ignore income taxes.)
PINA INC.
Retained Earnings Statement

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