Retained Earnings StatementRetained Earnings Statement

On January $1,2019,$ Castillo Company had a retained earnings balance of $$206,000.$ During the year, the following events occurred:

Cash dividends totaling $$9,000$ and stock dividends totaling $$6,000$ were declared and distributed.

Net income was $$58,000.$

Two thousand shares of callable preferred stock were recalled and retired at a price of $$150$ per share. This stock had originally been issued at $$130$ per share.

A material error in net income for a previous period was corrected. This error correction decreased retained earnings by $$12,600$ after a related income tax credit of $$5,400.$

Required:

Prepare a statement of retained earnings for the year ended December $31,2019.$

CASTILLO COMPANY

Statement of Retained Earnings

For Year Ended December $31,2019$

Retained earnings, as previously reported, January $1,2019$

Less: Cash dividends $x$

Adjusted retained earnings, January $1,2019$

Add: Net income $$

Less: Cash dividends $$

Less: Stock dividends $$

Less: Reduction due to retirement of preferred stock $x$

Retained earnings, December $31,2019$

$x$

$x$

$x$

On January $1,2019,$ Castillo Company had a retained earnings balance of $$206,000.$ During the year, the following events occurred:

Cash dividends totaling $$9,000$ and stock dividends totaling $$6,000$ were declared and distributed.

Net income was $$58,000.$

Two thousand shares of callable preferred stock were recalled and retired at a price of $$150$ per share. This stock had originally been issued at $$130$ per share.

A material error in net income for a previous period was corrected. This error correction decreased retained earnings by $$12,600$ after a related income tax credit of $$5,400.$

Required:

Prepare a statement of retained earnings for the year ended December $31,2019.$

CASTILLO COMPANY

Statement of Retained Earnings

For Year Ended December $31,2019$

Retained earnings, as previously reported, January $1,2019$

Add: Correction of overstatement of previous net income $x$

Adjusted retained earnings, January $1,2019$

$x$

Less: Net income $x$

Less: Stock dividends $$

Less: Reduction due to retirement of preferred stock $$

Retained earnings, December $31,2019$