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Retained Earnings Statement Rolt Company began 2016 with a $145,000 balance in retained earnings. During the year, the following events occurred: 1. The company earned net income of $86,000. 2. A material error in net income from a previous period was corrected. This error correction increased retained earnings by $7,140 after related income taxes of $3,060. 3. Cash dividends totaling $12,000 and stock dividends totaling $19,500 were declared. 4. One thousand shares of callable preferred stock that originally had been issued at $120 per share were recalled and retired at the beginning of 2016 for the call price of $130 per share. 5. Treasury stock (common) was acquired at a cost of $24,000. State law requires a restriction of retained earnings in an equal amount. The company reports its retained earnings restrictions in a note to the financial statements. Required: 1. Prepare a statement of retained earnings for the year ended December 31, 2016. ROLT COMPANY Statement of Retained Earnings For Year Ended December 31, 2016 Retained earnings, as previously reported, January 1, 2016 145,000 Add: Correction due to understatement of previous income 7,140 Adjusted retained earnings, January 1, 2016 152,140 Add: Net income 86,000 238,140 Less: Cash dividends 12,000 Less: Stock dividends 19,500 Less: Reduction due to retirement of preferred stock 10,000 22,000 X Retained earnings, December 31, 2016 216,640 x