The Holiday Corporation, a private company, began operations on January I, 2011. During its first three years of operations, Holiday reported net income and declared dividends as follows:

The following information is for 2014:

Instructions
Prepare a 2014 statement of retained earnings for Holiday Corporation. The company follows ASPE.

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Net income $ 55,000 135,000 160,000 Dividends declared 2011 2012 2013 30,000 50,000 Income before income tax Prior period adjustment: understatement of 2011 depreciation expense (before tax) Cumulative increase in prior years income from change in inventory method (before tax) Dividends declared (of this amount, $25,000 will be paid on January 15, 2015) Effective tax rate $440,000 57,000 37,000 100,000 25%