Question 5 The post-closing trial balance of Stellar Company SpA at December 31, 2017, contains the following equity accounts. Share CapitalPreference (15,300 shares issued) 765,000 Share Capital-Ordinary (259,100 shares issued) 3,109,200 Share Premium-Preference 254,500 Share Premium-Ordinary 404,400 Ordinary Share Dividends Distributable 310,920 Retained Earnings 1,048,680 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; 15,300 shares have been outstanding since January 1, 2016. 3. Authorized shares are 20,000 preference shares, 518,200 ordinary shares with a 12 par value. 4. The January balance in Retained Earnings was 1,199,400. 5. On July 1, 21,800 ordinary shares were issued for cash at 17 per share. 6. On September 1, the company discovered an understatement error of 77,500 in computing depreciation in 2016. The net of tax effect of 54,250 was properly debited directly to Retained Earnings. A cash dividend of 241,500 was declared and properly allocated to preference and ordinary shares on October 1. No dividends were paid to preference shareholders in 2016. 8. On December 31, a 10% ordinary share dividend was declared out of retained earnings on ordinary shares when the market price per share was 17. 9. Net income for the year was 585,500. 10. On December 31, 2017, the directors authorized disclosure of a 199,300 restriction of retained earnings for plant expansion. Reproduce the Retained Earnings account for 2017. (List items in order presented in the problem.) Retained Earnings SHOW LIST OF ACCOUNTS