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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. Dividends Declared 2017 2018 2019 Net Income $ 40,000 $ 125,000 $ 160,000 $ $ $ 50,000 50,000 The following information relates to 2020. Income before income tax Prior period adjustment: understatement of 2018 depreciation expense (before taxes) Cumulative decrease in income from change in inventory methods, (before taxes) Dividends declared (of this amount, $25,000 will be paid on Jan. 15, 2021) Effective tax rate $ $ $ $ 240,000 25,000 35,000 100,000 40% Prepare a 2020 retained earnings statement for Eddie Zambrano Corporation. Calculation of net income for 2020: Income before taxes Income tax expense Net income Calculation of beginning retained earnings: Net income for 2017 Net income for 2018 Net income for 2019 Less: Dividends 2018 Less: Dividends 2019 Retained earnings, January 1, 2020 EDDIE ZAMBRANO CORPORATION Retained Earnings Statement For the Year Ended December 31, 2020 Balance, January 1, as reported Correction for depreciation error (net of $10,000 tax) Cumulative decrease in income from change in inventory methods, (net of $14,000 tax) Balance, January 1, as adjusted Add: Net income Less: Dividends declared Balance, December 31

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