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. 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 tax $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 (of this amount. $25,000 will be paid on Jan. 15. 2015) $100,000 Effective tax rate 40%