Problem 14-2A

The stockholders' equity of Karp Company at January 1, 2014, are as follows.

Preferred Stock, 6%, $50 par	$615,000
Common Stock, $7 par	1,134,000
Paid-in Capital in Excess of Par-Preferred Stock	198,400
Paid-in Capital in EXcess of Par- Common Stock	309,000
Retyained Earnings	797,000

There were no dividends in arrears on preferred stock. During 2014, the company had the following transactions and events.

July. 1 Declared a $0.50 cash dividend per share on common stock.

Aug. 1 Discovered $28,200 understatement of 2013 depreciation on equipment. (Ignore income taxes).

Sept. 1 Paid the cash dividend declared on July 1.

Dec. 1 Declared a 10% stock dividend on common stock when the amrket price of the stock was $18 per share.

15 Declared a 6% cash dividend on preferred stock apyable January 15, 2015.

31 Determined that net income for the year was %315,700.

31 Recognized a $193,100 restriction of retained earnings for plant expansion.

A. Journalize the transactions, events, and closing entries for net income and dividends.

B. Enter the beginning balances i the accounts, and post to the stockholders' equity accounts.

C. Prepare a retained earnings statement for the year.

D. Prepare a stockholders's equity section at December 31, 2014.