Shaw Corporation reported stockholders' equity on December 31 of the prior year as follows: Common stock, $5 par value, 1,000,000 shares authorized, 500,000 shares issued…….$2,500,000Paid-in capital in excess of par, common stock...1,000,000Retained earnings……………………………….3,000,000The following selected transactions occurred during the current year:Feb. 15The board of directors declared a 5% stock dividend to stockholders of record on March 1, payable March 20. The stock was selling for $8 per share.Mar. 9Distributed the stock dividend.May 1A cash dividend of $0.30 per share was declared by the board of directors to stockholders of record on May 20, payable June 1.June 1Paid the cash dividend.Aug. 20The board decided to split the stock 4-for-1, effective on
September 1.Sept. 1Stock split 4-for-1.Dec. 31Earned a net income of $800,000 for the current year.Prepare a statement of retained earnings as of December 31 of the current year.
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| Shaw Corporation Statement of Retained Earnings For the Year Ended December 31 | ||
| Retained earnings, December 31 (prior year) … | ? | $3,000,000 |
| Plus net income ……………………………….. | ? | 800,000 |
| Less: | ? | ? |
| Stock dividend (500,000 shares * 5% * $8) | $(200,000) | ? |
| Cash dividend (525,000 shares * $0.30) ….. | (157,500) | (357,500) |
| Retained earnings, December 31 (current year) | ? | $3,442,500 |
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