21) Prior period adjustments are not included in the statement of retained earnings.

22) In the closing process for corporations, net income is closed to the capital account.

23) The statement of retained earnings does not include the account Preferred Stock.

24) Prepare a statement of retained earnings in proper form for White Corporation for the year ended December 31, 20XX, from the following:

 

Retained Earnings, January 1, 20XX$5,000

Dividends declared during the year1,800

Net income for the year4,000

Correction of prior year error. Purchase

of land recorded as rent expense500

25) Prepare a statement of retained earnings in proper form for Gray Corporation for the year ended December 31, 20XX, from the following:

 

Retained Earnings, January 1, 20XX$7,700

Dividends declared during the year1,400

Net income for the year10,000

Correction of prior year error, Sales overstated3,000