Shaw Corrections Corporation reported stockholders equity on December 31 of the prior year as follows: Common stock, $5 par value, 1,000,000 shares authorized,

500,000 shares issued. $2,500,000Paid-in capital in excess of par, common stock... 1,000,000 Retained earnings. 3,000,000

The following selected transactions occurred during the current year: Feb. 15 The board of directors declared a 5% stock dividend to stockholders of record on March 1, payable March 20. The stock was selling for $8 per share. Mar. 9 Distributed the stock dividend. May 1 A cash dividend of $0.30 per share was declared by the board of directors to stockholders of record on May 20, payable June 1. June 1 Paid the cash dividend. Aug. 20 The board decided to split the stock 4-for-1, effective on September 1. Sept. 1 Stock split 4-for-1. Dec. 31 Earned a net income of $800,000 for the current year.

Prepare a statement of retained earnings as of December 31 of the current year.