Eddie Zambrano Corporation, a private company, began operations on January 1, 2014. During its first three years of operations, Zambrano reported net income and declared dividends as follows:

The following information is for 2017:
Income before income taxes
240000
Prior period adjustment: Understatement of 2015 depreciation expense (before taxes)
25000
Cumulative increase in prior years' income from change in inventory method (before taxes)
35000
Dividends declared
100000
Of this amount, $25,000 will be paid on January 15, 2018
25000
Effective tax rate
0.4
Instructions:
(a) Prepare a 2017 statement of retained earnings for Eddie Zambrano Corporation. The company follows ASPE.
(b) Assume Eddie Zambrano Corporation restricted retained earnings in the amount of $70,000 on December 31, 2017. After this action, what would Zambrano report in its December 31, 2017, balance sheet?

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Year 2014 2015 2016 Net income S40,000 125,000 160,000 Dividends declared SO 50,000 50,000