The stockholders' equity accounts of Karp Company at January 1, 2017, are as follows.

Preferred Stock,6%, $50par

$615,000Common Stock, $4par

656,000Paid-in Capital in Excess of ParPreferred Stock

190,000Paid-in Capital in Excess of ParCommon Stock

297,500Retained Earnings

817,500

There were no dividends in arrears on preferred stock. During 2017, the company had the following transactions and events.

July 1

Declared a $0.70cash dividend per share on common stock.Aug. 1

Discovered $25,000understatement of depreciation expense in 2016. (Ignore income taxes.)Sept. 1

Paid the cash dividend declared on July 1.Dec. 1

Declared a15% stock dividend on common stock when the market price of the stock was $16per share.15

Declared a6% cash dividend on preferred stock payable January 15, 2018.31

Determined that net income for the year was $392,000.31

Recognized a $198,000restriction of retained earnings for plant expansion.