Eddie Zambrano Corporation, a private company, began operations on January 1, 2017. During its first three years of operations, Zambrano reported net income and declared dividends as follows:

The following information is for 2020:Income before income tax .............................................................. $240,000Correction of prior period error: understatementof 2018 depreciation expense (before tax) ....................................... 25,000Cumulative increase in prior years? income fromchange in inventory method (before tax) .......................................... 35,000Dividends declared (of this amount, $25,000 willbe paid on January 15, 2021) ............................................................. 100,000Effective tax rate ........................................................................................ 40%

Instructions

Prepare a 2020 statement of retained earnings for Eddie Zambrano Corporation. The company follows ASPE.

Transcribed Image Text:

Dividends declared $ -0- Net income $ 40,000 125,000 2017 2017 2018 50,000 50,000 160,000 2019