The stockholders’ equity accounts of Motz Inc., at January 1, 2012, are as follows.

Preferred Stock, $100 par, 7%                                         $600,000
Common Stock, $10 par                                                     900,000
Paid-in Capital in Excess of Par—Preferred Stock           100,000
Paid-in Capital in Excess of Par—Common Stock            200,000
Retained Earnings                                                              500,000

There were no dividends in arrears on preferred stock. During 2012, the company had the following transactions and events.

July   1 Declared a $0.50 cash dividend on common stock.
Aug.  1 Discovered a $72,000 overstatement of 2011 depreciation on equipment. Ignore income taxes.
Sept.  1 Paid the cash dividend declared on July 1.
Dec.   1 Declared a 10% stock dividend on common stock when the market value of the stock was $16 per share.
        15 Declared a 7% cash dividend on preferred stock payable January 31, 2013.
        31 Determined that net income for the year was $350,000.

Instructions
  (a) Journalize the transactions and the closing entry for net income.
  (b) Enter the beginning balances in the accounts and post to the stockholders’ equity accounts (Note: Open additional stockholders’ equity accounts as needed.)
  (c) Prepare a retained earnings statement for the year.
  (d) Prepare a stockholders’ equity section at December 31, 2012.