Retained Earnings Statement

Rolt Company began 2013 with a $120,000 balance in retained earnings. During the year, the following events occurred:

1.The company earned net income of $76,000.

2.A material error in net income from a previous period was corrected. This error correction increased retained earnings by $8,820 after related income taxes of $3,780.

3.Cash dividends totaling $12,500 and stock dividends totaling $17,500 were declared.

4.One thousand shares of callable preferred stock that originally had been issued at $120 per share were recalled and retired at the beginning of 2013 for the call price of $130 per share.

5.Treasury stock (common) was acquired at a cost of $21,000. State law requires a restriction of retained earnings in an equal amount. The company reports its retained earnings restrictions in a note to the financial statements.