Eddie Zambrano Corporation began operations on January 1, 2011.
accounting teacher (Not rated)
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E4-12 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 |
2011 | $40,000 | $0 |
2012 | 125,000 | 50,000 |
2013 | 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 |
dividends declared (of this amount, $25,000 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, 2014, balance sheet?
11 years ago
Eddie Zambrano Corporation began operations on January 1, 2011.
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