Eddie Zambrano Corporation began operations on January 1, 2017. During its first 3 years of operations, Zambrano reported net income and declared dividends as follows.

The following information relates to 2020.Income before income tax................................................................................................................$240,000Prior period adjustment: understatement of 2018 depreciation expense (before taxes).........$ 25,000Cumulative decrease in income from change in inventory methods (before taxes)..................$ 35,000Dividends declared (of this amount, $25,000 will be paid on Jan. 15, 2021)...............................$100,000Effective tax rate..........................................................................................................................................20%

Instructions

a. Prepare a 2020 retained earnings statement for Eddie Zambrano Corporation.

b. Assume Eddie Zambrano Corporation restricted retained earnings in the amount of $70,000 on December 31, 2020. After this action, what would Zambrano report as total retained earnings in its December 31, 2020, balance sheet?

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Net Income Dividends Declared $ -0- 2017 2018 2019 $ 40,000 125,000 50,000 160,000 50,000