$740,000 Preferred Stock (14,800 shares issued) Common Stock (244,800 shares issued) 2,692,800 Paid-in Capital in Excess of Par-Preferred Stock 257,200 389,100 Paid-in Capital in Excess of Par r-Common Stock Common Stock Dividends Distributable 269,280 Retained Earnings 926,270 A review of the accounting records reveals the following. 1. No errors have been made in recording 2015 transactions or in preparing the closing entry for net income. 2. Preferred stock is $50 par, 6%, and cumulative; 14,800 shares have been outstanding since January 1, 2014. Authorized stock is 19,800 shares of preferred, 489,600 shares of common with a $11 par value. 4. The January 1 balance in Retained Earnings was $1,105,800. 5. On July 1, 21,500 shares of common stock were issued for cash at $17 per share. On September 1, the company discovered an understatement error of $88,700 in computing depreciation in 2014, which overstated net income. The net of tax effect of $62,090 was properly debited directly to Retained Earnings. 7. A cash dividend of $269,280 was declared and properly allocated to preferred and common stock on October 1. No dividends were paid to preferred stockholders in 2014. On December 31, a 10% common stock dividend was declared out of retained earnings on common stock when the market price per share was $17. 9. Net income for the year was $568,000. 10 On December 31, 2015, the directors authorized disclosure of a $201,800 restriction of retained earnings for plant expansion. (Use Note X.)