Jason Woo Corporation began operations on January 1, 2017. During its first 3 years of operations, Woo reported net income and declared dividends as follows:
| Net income Dividends declared
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2017 $160,000 $ –0–
2018 500,000 200,000
2019 640,000 200,000
The following information relates to 2020:
|Income before income tax||$960,000|
|Prior period adjustment: understatement of 2018 depreciation expense (before taxes)||$100,000|
|Cumulative decrease in income from change in inventory methods (before taxes)||$140,000|
|Dividends declared (of this amount, $100,000 will be paid on Jan. 15, 2021)||$400,000|
|Effective tax rate||20%|
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