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The Ayayai Corporation, a private company, began operations on January 1, 2017. During its first three years of operations, Ayayai reported net income and declared
The Ayayai Corporation, a private company, began operations on January 1, 2017. During its first three years of operations, Ayayai reported net income and declared dividends as follows:
Net income | Dividends declared | |||||
---|---|---|---|---|---|---|
2017 | $ 60,000 | $0 | ||||
2018 | 135,000 | 50,000 | ||||
2019 | 161,000 | 50,000 |
The following information is for 2020:
Income before income tax | $ 360,000 | |
Correction of prior period error: understatement of 2018 depreciation expense (before tax) | 45,000 | |
Cumulative increase in prior years income from change in inventory method (before tax) | 55,000 | |
Dividends declared (of this amount, $ 25,000 will be paid on January 15, 2021) | 100,000 | |
Effective tax rate | 40% |
Prepare a 2020 statement of retained earnings for Ayayai Corporation. The company follows ASPE. (List items that increase retained earnings first.)
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