Rolt Company began 2016 with a $120,000 balance in retainedearnings. During the year, the following events occurred:
- The company earned net income of $80,000.
- A material error in net income from a previous period wascorrected. This error correction increased retained earnings by$9,800 after related income taxes of $4,200.
- Cash dividends totaling $13,000 and stock dividends totaling$17,000 were declared.
- One thousand shares of callable preferred stock that originallyhad been issued at $110 per share were recalled and retired at thebeginning of 2016 for the call price of $120 per share.
- Treasury stock (common) was acquired at a cost of $20,000.State law requires a restriction of retained earnings in an equalamount. The company reports its retained earnings restrictions in anote to the financial statements.
Required:
1. Prepare a statement of retained earnings for the year endedDecember 31, 2016.
| ROLT COMPANY |
| Statement of Retained Earnings |
| For Year Ended December 31, 2016 |
| Retained earnings, as previously reported, January 1, 2016 | | $ |
| | |
| Adjusted retained earnings, January 1, 2016 | | $ |
| | |
| | $ |
| $ | |
| | |
| | |
| Retained earnings, December 31, 2016 | | $ |
