Calculation of net income for 2017? Exercise

E4-12 (LO 6) Retained Earnings Statement 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. The following information relates to 2020 . Income before income tax $240,000 Prior period adjustment: understatement of 2018 depreciation expense (before taxes) $25,000 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) $100,000 Effective tax rate 40%