Exercise 12-7 Retained earnings, dividend distribution LO2, 5 The December 31, 2020, equity section of ZoomZoom Inc's balance sheet appears below. ZoomZoom Inc. Equity Section of the Balance Sheet December 31, 2020 Contributed capital: Preferred shares, $3.75 cumulative, 47,000 shares authorized and issued Preferred shares, $10 non-cumulative, 7,300 shares authorized $1,730,000 and issued 740,000 1,820,000 $4,290,000 776,600 Common shares, 470,000 shares authorized and issued Total contributed capital Retained earnings $5,066,600 Total equity Required: All the shares were issued on January 1, 2018 (when the corporation began operations). No dividends had been declared during the first two years of operations (2018 and 2019). During 2020, the cash dividends declared and paid totalled $648,300. 1. Calculate the amount of cash dividends paid during 2020 to each of the three classes of shares. Cash Dividends Cumulative preferred shares 528,750 $ Noncumulative preferred shares $ 73,000 46,550 $ Common shares 2. Assuming profit earned during 2020 was $1,285,000, determine the December 31, 2019, balance in retained earnings. $ 128,300 Retained earnings balance 3. Prepare a statement of changes in equity for the year ended December 31, 2020. (Amounts to be deducted should be indicated by a minus sign.) ZOOMZOOM INC. Statement of Changes in Equity For Year Ended December 31, 2020 Preferred Preferred Common Retained shares, $10 Non-cum. Total equity shares, $3.75 cum. shares earnings Balance, January 1 Issuance of shares Dividends 0$ $ $ Balance, December 31 10 10 0