Problem 2 - (15 Points)

Oswald Company reported retained earnings at December 31, 2016, of $500,000. Oswald had 300,000

shares of common stock outstanding throughout 2017.

The following transactions occurred during 2017.

1.

A cash dividend of $0.30 per share was declared and paid.

2.

A 10% stock dividend was declared and distributed when the market price per share was $15

per share.

3. An error was discovered; in 2016 depreciation expense was recorded at $70,000 but the correct

amount was $40,000.

4. Net income was $650,000.

Instructions:

Prepare a retained earnings statement for 2017.

Problem 2 - (15 Points) Oswald Company reported retained earnings at December 31, 2016, of $500,000. Oswald had 300,000 shares of common stock outstanding throughout 2017. The following transactions occurred during 2017. 1. A cash dividend of $0.30 per share was declared and paid. 2. A 10% stock dividend was declared and distributed when the market price per share was $15 per share. 3. An error was discovered; in 2016 depreciation expense was recorded at $70,000 but the correct amount was $40,000. 4. Net income was $650,000. Instructions: Prepare a retained earnings statement for 2017