Shown below in T-account format are the changes affecting the retained earnings of Forge Corporation during 2018. At January 1, 2018, the corporation had outstanding 108 million common shares, $1 par per share.

1. From the information provided by the account changes you should be able to recreate the transactions that affected Forges retained earnings during 2018. Prepare the journal entries that Forge must have recorded during the year for these transactions.

Record the retirement of common shares.

Record the closing entry for net income.

Record the declaration and payment of cash dividend.

Record the declaration and distribution of a stock dividend.

2. Prepare a statement of retained earnings for Forge for the year ended 2018.

Retained Earnings ($ in millions) 110 Beginning balance Retirement of 8 million common shares for $39 million Net income for the year Declaration and payment of a $0.36 per share cash dividend Declaration and distribution of a 4% stock dividend 144 Ending balance FORGE CORPORATION Statement of Retained Earnings FOR THE YEAR ENDED DECEMBER 31, 2018 (S in millions) Balance at January 1 110 Deductions Balance at December 31