On January 1, 2017, Potomac Corporation had these stockholders equity accounts.

Common Stock ($10 par value, 82,000 shares issued and outstanding)

$820,000

Paid-in Capital in Excess of Par Value

508,000

Retained Earnings

640,000

Total stockholders equity

$1,968,000

During the year, the following transactions occurred.

15-Jan

Declared a $0.70 cash dividend per share to stockholders of record on January 31, payable February 15.

15-Feb

Paid the dividend declared in January.

15-Apr

Declared a 10% stock dividend to stockholders of record on April 30, distributable May 15. On April 15, the market price of the stock was $14 per share.

15-May

Issued the shares for the stock dividend.

1-Dec

Declared a $0.70 per share cash dividend to stockholders of record on December 15, payable January 10, 2018.

31-Dec

Determined that net income for the year was $398,000.

31-Dec

Close net income and dividends to Retained Earnings.

(a) Journalize the transactions. (Include entries to close net income and dividends to Retained Earnings.)

(b) Prepare the stockholders equity section of the balance sheet at December 31.
Please complete the blanks below. Add additional lines as needed. Enter 0 if the ithem is not applicable.
				POTOMAC CORP.
				Partial Balance Sheet
				31-Dec-17
Stockholders equity
Paid-in capital
Capital stock
Common stock, _____ par value, ______ shares issued and
______ shares outstanding
Additional paid-in capital	Additional paid-in capital
	Total paid-in capital
Retained earnings
Total paid-in capital and retained earnings	Total paid-in capital and retained earnings
Accumulated other comprehensive income
Less: Treasury stock (_____ shares)
Total stockholders equity
(c) Calculate the payout ratio and return on common stockholders equity. (Round answers to 1 decimal place, e.g. 12.5%.)
Payout ratio					%
Return on comon stockholders' equity					%
Note:
Payout ratio = Cash dividends / Net income
Return on comon stockholders' equity = (Net income preferred dividends) Average common stockholders equity)
Average common stockholders equity = (Beginning balance + Ending balance) / 2