The ledger of Wade Corporation at December 31, 2014, after the books have been closed, contains the following stockholders’ equity accounts.

Preferred Stock (10,000 shares issued) $1,000,000 Common Stock (300,000 shares issued) 1,500,000 Paid-in Capital in Excess of Par Value—Preferred Stock 200,000 Paid-in Capital in Excess of Stated Value—Common Stock 1,600,000 Retained Earnings 2,860,000 A review of the accounting records reveals this information:

1 Preferred stock is 8%, $100 par value, noncumulative. Since January 1, 2013, 10,000 shares have been outstanding; 20,000 shares are authorized.

2 Common stock is no-par with a stated value of $5 per share; 600,000 shares are authorized.

3 The January 1, 2014, balance in Retained Earnings was $2,380,000.

4 On October 1, 60,000 shares of common stock were sold for cash at $9 per share.

5 A cash dividend of $400,000 was declared and properly allocated to preferred and common stock on November 1. No dividends were paid to preferred stockholders in 2013.

6 Net income for the year was $880,000.

7 On December 31, 2014, the directors authorized disclosure of a $160,000 restriction of retained earnings for plant expansion. (Use Note A.)

Instructions

(a) Reproduce the Retained Earnings account (T-account) for the year.

(b) Prepare the stockholders’ equity section of the balance sheet at December 31.

AppendixLO1