On December 31, 2013, Andes Company had 1,500,000 $10 par ordinary shares issued and outstanding. The equity accounts at December 31, 2013, had the following balances.

Share Capital—Ordinary                                             $15,000,000
Share Premium—Ordinary                                              1,500,000
Retained Earnings                                                             900,000
Transactions during 2014 and other information related to equity accounts were as follows.
1. On January 10, 2014, Andes issued at $105 per share 100,000 $100 par value, 8% cumulative preference shares.
2. On February 8, 2014, Andes reacquired 20,000 ordinary shares for $14 per share.
3. On June 8, 2014, Andes declared a cash dividend of $1 per share on the ordinary shares outstanding, payable on July 10, 2014, to shareholders of record on July 1, 2014.
4. On December 15, 2014, Andes declared the yearly cash dividend on preference shares, payable January 10, 2015, to shareholders of record on December 15, 2014.
5. Net income for the year is $3,600,000.
6. It was discovered that depreciation expense had been understated in 2013 by $65,000.

Instructions
(a) Prepare a retained earnings statement for the year ended December 31, 2014.
(b) Prepare the equity section of Andes’s statement of financial position at December 31, 2014.