Question 5 The post-closing trial balance of Riverbed Company SpA at December 31, 2017, contains the following equity accounts. Share Capital-Preference (15,900 shares issued) Share Capital-Ordinary (241,500 shares issued) Share Premium-Preference Share Premium-Ordinary Ordinary Share Dividends Distributable Retained Earnings 795,000 2,656,500 245,400 410,700 265,650 1,080,520 A review of the accounting records reveals the following. 1. No errors have been made in recording 2017 transactions or in preparing the closing entry for net income. 2. Preference shares are 50 par, 8%, and cumulative; 15,900 shares have been outstanding since January 1, 2016. 3. Authorized shares are 20,000 preference shares, 483,000 ordinary shares with a 11 par value. 4. The January 1 balance in Retained Earnings was 1,196,400. 5. On July 1, 18,300 ordinary shares were issued for cash at 16 per share. 6. On September 1, the company discovered an understatement error of 78,400 in computing depreciation in 2016. The net of tax effect of 54,880 was properly debited directly to Retained Earnings. 7. A cash dividend of 253,500 was declared and properly allocated to preference and ordinary shares on October 1. No dividends were paid to preference shareholders in 2016. On December 31, a 10% ordinary lend was declared out of retained earnings on ordinary sha rket price per share was 16. 9 Net income for the year was 578,900. 10. On December 31, 2017, the directors authorized disclosure of a 197,400 restriction of retained earnings for plant expansion. (a) Reproduce the Retained Earnings account for 2017. (List items in order presented in the problem.) Retained Earnings