[dily0483]

How do you calcualte the net income of the following information?

Lee Corporation, a U.S. company, began operations on January 1, 2004.
During its first 3 years of operations, Lee reported net income and declared dividends as follows.

Net income Dividends declared
2004 $ 40,000 $ –0–
2005 125,000 50,000
2006 160,000 50,000

The following information relates to 2007:

Income before income tax $240,000
Prior period adjustment: understatement of 2005 depreciation expense (before taxes) $ 25,000
Cumulative decrease in income from change in inventory methods (before taxes) $ 35,000
Dividends declared (of this amount, $25,000 will be paid on January 15, 2008) $100,000
Effective tax rate 40%

Lee Corporation
Retained Earnings Statement
For the Year Ended December 31, 2007
Balance, January 1, as reported $225,000*
Correction for depreciation error (net of $10,000 tax) (15,000)
Cumulative decrease in income from change in
inventory methods (net of $14,000 tax)
(21,000)
Balance, January 1, as adjusted 189,000
Add: Net income 144,000**
333,000
Less: Dividends declared 100,000
Balance, December 31 $233,000
*($40,000 + $125,000 + $160,000) – ($50,000 + $50,000)
**[$240,000 – (40% X $240,000)]

Common stock $500
Treasury stock (-$200)
Additional paid-in principle $1000
Shares outstanding 375,940
Shares authorized 500,000
Shares in treasury 30,000
Multiply 1000 to the dollar amounts of stock.

[morgaine300]

Please always start your own thread instead of tagging onto someone else's and do not duplicate post. I've deleted your duplicate.

I don't understand what your question is. The net income of 144,000 is already in there.