The post-closing trial balance of Dondec Corporation at December 31, 2014, contains these stockholders’ equity accounts.

Preferred Stock (6,000 shares issued) $ 300,000 Common Stock (350,000 shares issued) 3,500,000 Paid-in Capital in Excess of Par Value—Preferred Stock 250,000 Paid-in Capital in Excess of Par Value—Common Stock 520,000 Retained Earnings 720,000 A review of the accounting records reveals this information:

1 Preferred stock is $50 par, 10%, and cumulative; 6,000 shares have been outstanding since January 1, 2013.

2 Authorized stock is 20,000 shares of preferred and 500,000 shares of common with a

$10 par value.

3 The January 1, 2014, balance in Retained Earnings was $800,000.

4 On July 1, 20,000 shares of common stock were sold for cash at $16 per share.

5 A cash dividend of $380,000 was declared and properly allocated to preferred and common stock on October 1. No dividends were paid to preferred stockholders in 2013.

6 Net income for the year was $300,000.

7 On December 31, 2014, the directors authorized disclosure of a $150,000 restriction of retained earnings for plant expansion. (Use Note X.)

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