Scobie Company began 2013 with a retained earnings balance of $142,400. During an examination of its accounting records on December 31, 2013, Scobie found it had made the following material errors, for both financial reporting and income tax reporting, during 2012.

1. Depreciation expense of $15,000 inadvertently had been recorded twice for the same machine.

2. No accrual had been made at year-end for interest; therefore, interest expense had been understated by $4,000.

Scobie's net income after taxes during 2013 was $60,000. The company has been subject to a 30% income tax rate for the past several years. It declared and paid dividends of $13,000 during 2013.

Required:

1. Prepare whatever journal entries in 2013 are necessary to correct Scobie's books for its previous errors. Make your corrections directly to the Retained Earnings account.

2. Prepare the statement of retained earnings for 2013.