The 2012 annual report for Sneer Corporation disclosed that the company declared and paid preferred dividends in the amount of $170,000 in 2012. It also declared and paid dividends on common stock in the amount of $2.70 per share. During 2012, Sneer had 1 million common shares authorized; 370,000 shares had been issued; and 163,000 shares were in treasury stock. The balance in Retained Earnings was $870,000 on December 31, 2011, and 2012 Net Income was $370,000.

Required:

1.

Prepare journal entries to record the declaration, and payment, of dividends on (a) preferred and (b) common stock

• 1.

  Record the declaration of a cash dividend of $170,000 to the preferred stockholders.

• 2.

  Record the payment of the cash dividend to the preferred stockholders.

• 3.

  Record the declaration of a cash dividend of $2.70 per share to the common stockholders payable on the shares outstanding.

• 4.

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

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