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Conn Co. reported a retained earnings balance of $400,000 at December 31, 1991. In August 1992, Conn
determined that insurance premiums of $60,000 for the three-year period beginning January 1, 1991, had
been paid and fully expensed in 1991. Conn has a 30% income tax rate. What amount should Conn report
as adjusted beginning retained earnings in its 1992 statement of retained earnings?
A. $428,000
B. $442,000
C. $420,000
D. $440,000
Answer: A
Choice "b" is correct. $428,000 net of tax.

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