During the year ended 30 June 2019, the directors of Cooma Ltd paid a final dividend out of retained earnings of $60 000, which had been recommended at the end of the previous financial year. They also declared and paid an interim dividend of $150 000 on 1 February 2020. The balance of the Retained Earnings account at 1 July 2019 was $200 000.

At 30 June 2020, the ledger accounts showed that the company had made a total profit of $1 000 000 for the year. However, the directors determined that the following adjustments were still necessary to finalise the accounts.

1. Provide for an income tax liability of $300 000.

2. Recommend the payment of a final dividend of $100 000 out of retained earnings.

3. Transfer $175 000 to a general reserve and $100 000 to a plant replacement reserve.

Required

(a) Prepare journal entries to record all transactions above for the year ended 30 June 2020.

(b) Prepare the Retained Earnings account for the year ended 30 June 2020.