The balance in retained earnings on January 1, 2017, for Palmer Inc. was $850,000. During the year, the corporation paid cash dividends of $85,000 and distributed a stock dividend of $7,800. In addition, the company determined that it had understated its insurance expense in prior years by $54,000. Net income for 2017 was $130,000. Prepare the retained earnings statement for 2017. (List items that increase retained earnings first.)

PALMER INC. Retained Earnings Statement