Identifying and Analyzing Financial Statement Effects of Dividends

The stockholders' equity of Kinney Company at December 31, 2011, is shown below.

5% preferred stock, $100 par value, 10,000 shares authorized; 4,000 shares issued and outstanding	$ 400,000
Common stock, $5 par value, 200,000 shares authorized; 50,000 shares issued and outstanding	250,000
Paid-in capital in excess of par valuepreferred stock	40,000
Paid-in capital in excess of par valuecommon stock	300,000
Retained earnings	656,000
Total stockholders' equity	$1,646,000

(b) Compute retained earnings for 2012 assuming that the company reports 2012 net income of $253,000.