I do not understand. The dividends do not make sense to me and i have looked through my text book several times trying to understand. 2 photos should be in this question.

b) Prepare the statement of retained earnings for the year ended December 31, 2018. LADIEZ Corporation Calculation of Retained Earnings For the Year Ended December 31, 2018 Opening Balance Add: Net Income Less: Cash Dividends - Preferred Balance - December 31, 2018 () Prepare the shareholders' equity section of the balance sheet as at December 31, 2018. LADIEZ Corporation Balance Sheet (Partial) December 31, 2018 Stockholders' Equity Paid-In Capital Preferred Stock, 3% cumulative, $60 par value, 76,000 authorized, 4,100 issued and outstanding Common Stock, $5 par value, unlimited authorized, 216,520 issued and outstanding Additional Paid-In Capital Total Paid-In Capital Retained Earnings Total Stockholders' EquityIn 2018, Joanna and some of her friends invested money to start a company named LADIEZ Corporation. The following transactions occurred during 2018. Jan 1 The corporate charter authorized 76,000 shares of 3%, $60 par value cumulative preferred stock and unlimited shares of $5 par value common stock. Jan 6 Issued 207,000 common shares at $8 per share to Elizabeth and other investors. Jan 7 Issued another 520 common shares to Elizabeth in exchange for her services in organizing the corporation. The stockholders agreed that the services were worth $8,840. Jan 12 Issued 4,100 preferred shares for $246,000. Jan Issued 9,000 common shares in exchange for equipment. The fair market value of the equipment could not be readily determined, but the market price of the 14 common stock on this date was $16 per share. Nov The first annual dividend on preferred stock was declared. Dec 20 Paid the dividends declared on preferred stock. Dec Estimated income tax expense of $30,900. However, the actual amount of income tax due for this period based on tax laws is determined to be $28,500. LADIEZ Corporation generated a $135,000 net income during the year. The company uses the retained earnings method to record dividends. a) Prepare the journal entries to record the above transactions in 2018. Do not enter dollar signs or commas in the input boxes. Date Account Title and Explanation Debit Credit Jan 6 Cash 1656000 Common Stock 656000 X Paid-In Capital in Excess of Par, Common Stock * v 1656000 X Issued common stock for cash Jan 7 Organization Expenses Common Stock Paid-In Capital in Excess of Par, Common Stock * Issued common stock for services Jan 12 Cash Preferred Stock Issue of preferred stock for cash Jan 14 Equipment Common Stock Paid-In Capital in Excess of Par, Common Stock * Issued common stock for equipment Nov 15 Retained Earnings Dividends Payable * v Dividend declared on preferred stock Dec 20 Dividends Payable Cash Recording payment of dividend Dec 31 Income Tax Expense Deferred Income Tax Liability Income Tax Payable To record tax expense and liability