The 2012 annual report for Sneer Corporation disclosed that the company declared and paid preferred dividends in the amount of $100,000 in 2012. It also declared and paid dividends on common stock in the amount of $2 per share. During 2012, Sneer had 1 million common shares authorized; 300,000 shares had been issued; and 100,000 shares were in treasury stock. The balance in Retained Earnings was $800,000 on December 31, 2011, and 2012 Net Income was $300,000.

Required:

1.	Prepare journal entries to record the declaration, and payment, of dividends on (a) preferred and (b) common stock. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

A. Record the payment of the cash dividend to the common stockholders.

B. Record the declaration of a cash dividend of $2 per share to the common stockholders payable on the shares outstanding.

2. Using the information given above, prepare a statement of retained earnings for the year ended December 31, 2012.

SNEER CORPORATION
Statement of Retained Earnings
For the Year Ended December 31, 2012
Retained Earnings, January 1, 2012
Add: Net Income
Less: Dividends Declared on Preferred Stock
Less: Dividends Declared on Common Stock
Retained Earnings, December 31, 2012