Exercise 12-7 Retained earnings, dividend distribution LO2,5 The December 31, 2020, equity section of Zoom Zoom Inc.'s balance sheet appears below. $1,710,000 Zoom Zoom Inc. Equity Section of the Balance Sheet December 31, 2020 Contributed capital: Preferred shares, $3.75 cumulative, 45,000 shares authorized and issued Preferred shares, $10 non-cumulative, 7,500 shares authorized and issued Common shares, 450,000 shares authorized and issued Total contributed capital Retained earnings Total equity 720,000 1,800,000 $4,230,000 766,600 $4,996,600 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 $638,300. 1. Calculate the amount of cash dividends paid during 2020 to each of the three classes of shares. 2. Assuming profit earned during 2020 was $1,275,000, determine the December 31, 2019, balance in retained earnings. 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.)