1. The company earned net income of $77,000. 2. A material error in net income from a previous period was corrected. This error correction increased retained earnings by $7,630 after related
income taxes of $3,270.
3. Cash dividends totaling $12,500 and stock dividends totaling $18,000 were declared.
4. One thousand shares of callable preferred stock that originally had been issued at $105 per share were recalled and retired at the beginning of
2016 for the call price of $115 per share. 5. Treasury stock (common) was acquired at a cost of $17,000. State law requires a restriction of retained earnings in an equal amount. The
company reports its retained earnings restrictions in a note to the financial statements.
Required:
1. Prepare a statement of retained earnings for the year ended December 31, 2016.