Assured Collision Repair Inc. reported the following shareholders’ equity information on December 31, 2019:

Contributed capital
Preferred shares, $2.50, convertible to common on a 2-for-1
basis, 100,000 shares authorized, 50,000 shares issued and
outstanding ......................................................................................... $1,500,000
Common shares, unlimited number of shares authorized,
150,000 shares issued and outstanding ........................................... 1,500,000
Total contributed capital ..................................................................... 3,000,000
Retained earnings ............................................................................... 1,200,000
Total shareholders’ equity ................................................................ $4,200,000

The following information is also available for the year ended December 31, 2020:
Sales for the year...................................................................... $3,150,000
Cost of goods sold...................................................................... 1,290,000
Operating expenses...................................................................... 792,000
Income from discontinued operations....................................... 132,000
Loss on sale of discontinued operations..................................... 76,000

Required

1. Record the following transactions in the general journal. Explanations are not required.

Feb. 1 Declared a cash dividend of $275,000, payable on March 1 to the shareholders of record on February 15. Indicate the amount payable to each class of shareholder.

Mar. 1 Paid the cash dividend declared on February 1.

May 2 Declared a 20 percent stock dividend on the common shares, distributable on July 4 to the shareholders of record on June 15. The market value of the shares was $11.00 per share.

Jul. 4 Distributed the common shares dividend declared on May 2.

Aug. 8 The company discovered that amortization expense recorded in 2018 was understated in error by $30,000. Ignore any tax consequences.

Dec. 31 Close only the Income Summary account, assuming the company pays taxes at the rate of 35 percent.

2. Prepare a combined statement of income and retained earnings for the year ended December 31, 2020. Use a three-column format to break out the information for discontinued operations. Include earnings per share information. For purposes of the earnings per share calculation, the weighted average number of common shares is 180,000.