Response to the following problem:
McEntire Corporation began operations on January 1, 2007. During its first 3 years of operations, McEntire reported net income and declared dividends as follows.
net income dividend declared
2007 40000 0
2008 125000 50000
2009 160000 50000
The following information relates to 2010. Income before income tax $220,000, Prior period adjustment: understatement of 2008 depreciation expense (before taxes) 25000, Cumulative decrease in income from change in inventory methods (before taxes)$ 45,000, Dividends declared (of this amount, $25,000 will be paid on Jan. 15, 2011)$100,000 ,Effective tax rate 20%
a. Prepare a 2010 retained earnings statement for McEntire Corporation. (Enter all amounts as positive amounts and subtract where necessary. List amounts from largest to smallest, eg 10,5,1.)
b. Assume McEntire Corp. restricted retained earnings in the amount of $70,000 on December 31, 2010. After this action, what would McEntire report as total retained earnings in its December 31, 2010, statement of financial position? Total retained earnings $--.