Jason Woo Corporation began operations on January 1, 2012. During its first 3 years of operations, Woo reported net income and declared dividends as follows.

The following information relates to 2014.
Income before income tax ............... $960,000
Prior period adjustment: understatement of 2013
depreciation expense (before taxes) .......... $100,000
Cumulative decrease in income from change
in inventory methods (before taxes) ........... $140,000
Dividends declared (of this amount, $100,000
will be paid on Jan. 15, 2015) ............ $400,000
Effective tax rate ................. 40%
Instructions
(a) Prepare a 2014 retained earnings statement for Jason Woo Corporation.
(b) Assume Jason Woo Corp. restricted retained earnings in the amount of $280,000 on December 31, 2014. Afterthis

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Net income Dividends declared 2012 2013 2014 $160,000 500,000 640,000 200,000 200,000