Eddie Zambrano Corporation began operations on January 1, 2011. During its first 3 years of operations, Zambrano reported net income and declared dividends as follows.

The following information relates to 2014.
Income before income tax .............................................................................................$240,000
Prior period adjustment: understatement of 2012 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 Jan. 15, 2015) ...............$100,000
Effective tax rate .................................................................................................................40%
Instructions
(a) Prepare a 2014 retained earnings statement for Eddie Zambrano Corporation.
(b) Assume Eddie Zambrano Corp. restricted retained earnings in the amount of $70,000 on December 31, 2014. After this action, what would Zambrano report as total retained earnings in its December 31, 2014, balance sheet?

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Dividends Declared $ -0- 50,000 50,000 Net Income 2011 2012 2013 125,000 160,000