The balance in retained earnings on January 1, 2017, for Palmer Inc. was $750,000. During the year, the corporation paid cash dividends of $85,000 and distributed a stock dividend of $7,000. In addition, the company determined that it had understated its insurance expense in prior years by $45,000. Net income for 2017 was $110,000. Prepare the retained earnings statement for 2017. (List items that increase retained earnings first.)

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