The following stockholders' equity section is from Bell Company's October 31, 1997, balance sheet:

During the ensuing fiscal year, Bell Company entered into the following transactions:
1. The appropriation of \(\$ 12,000\) of retained earnings had been authorized in October 1997 because of the likelihood of an unfavorable court decision in a pending lawsuit. The suit was brought by a customer seeking damages for the company's alleged breach of a contract to supply the customer with certain products at stated prices in 1996. The suit was concluded on March 6,1998 , with a court order directing the company to pay

\(\$ 10,500\) in damages. These damages were not deductible in determining the income tax liability. The board ordered the damages paid and the appropriation closed. The loss does not qualify as an extraordinary item.
2. The company acquired 1,000 shares of its own common stock at \(\$ 9\) in May 1998. On June 30, it reissued 500 of these shares at \(\$ 7.20\).
3. Dividends declared and paid during the year were \(6 \%\) on preferred stock and 18 cents per share on common stock. Both dividends were declared on September 1 and paid on September 30, 1998.
For the fiscal year, the company had net income after income taxes of \(\$ 11,400\), excluding the loss of the lawsuit.
Required

a. Prepare journal entries for the preceding numbered transactions.

b. Prepare a statement of retained earnings for the year ended October 31, 1998.

c. Prepare the stockholders' equity section of the October 31, 1998, balance sheet.

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Stockholders' equity: Paid-in capital: Preferred stock-$60 par value, 6%; 1,000 shares authorized; 350 shares issued and outstanding Common stock-$6 par value; 100,000 shares authorized; 40,000 shares issued and outstanding Paid-in capital from donation of plant site Total paid-in capital. Retained earnings: Appropriated: Appropriation for contingencies Unappropriated Total retained earnings Total stockholders' equity $ 21,000 240,000 15,000 12,000 $276,000 33,300 45,300 $321,300