Posted: April 5th, 2021

Eddie zambrano corporation began operations on january 1, 2011.

E4-12 (Retained Earnings Statement) 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.     Year Net income Dividends declared     2013 $40,000 $0     2014 125,000 50,000     2015 160,000 50,000     The following information relates to 2014:   Income before income taxes $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 $100,000 Of the dividends declared to date, the amount that will be paid on Jan 15, 2015 is: $25,000 Effective tax rate 40%   Instructions:

(a) Prepare a 2014 retained earnings statement for Eddie Zambrano Corporation.

(b) AssumeEddie 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, 201
4, balance sheet?

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