Problem 4-04 a-b Ayayai Inc. reported income from continuing operations before tax of $1,969,000 during 2020. Additional transactions occurring in 2020 but not included in the $1,969,000 were as follows: 1. The corporation experienced an insured flood loss of $88,000 during the year. 2. At the beginning of 2018, the corporation purchased a machine for $55,200 (residual value of $9,600) that has a useful life of six years. The bookkeeper used straight-line depreciation for 2018, 2019, and 2020, but failed to deduct the residual value in calculating the depreciable amount. 3. The sale of FV-NI investments resulted in a loss of $117,700. 4. When its president died, the corporation gained $110,000 from an insurance policy. The cash surrender value of this policy had been carried on the books as an investment in the amount of $50,600. (the gain is non-taxable.) 5. The corporation disposed of its recreational division at a loss of $115,000 before tax. Assume that this transaction meets the criteria for accounting treatment as discontinued operations. 6. The corporation decided to change its method of inventory pricing from average cost to the FIFO method. The effect of this change on prior years is to increase 2018 income by $66,000 and decrease 2019 income by $22,000 before taxes. The FIFO method has been used for 2020. Assume that beginning retained earnings for 2020 is $2,794,000 and that dividends of $192,500 were declared during the year. Prepare the retained earnings portion of the statement of changes in equity for 2020. (Round answers to o decimal places, e.g. 1525. List items that increase retained earnings first.) Ayayai Inc. Excerpt from Statement of Changes in Equity For the Year Ended December 31, 2020 Retained Earnings, January 1, 2020, As Reported 2 2794000 2794000 T Retroactive Adjustment for Change in Inventory Method (Net of Tax) 30800 I Correction of Depreciation Overstatement (Net of Tax) 7600 48800 T Retained Earnings, January 1, 2020, As Adjusted . Net Income / (Loss) 1275930 T Less M IT Dividends Declared 192500 T Retained Earnings, December 31, 2020