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On January 1, 2016, Kittson Company had a retained earnings balance of $218,600. It is subject...

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Accounting

On January 1, 2016, Kittson Company had a retained earningsbalance of $218,600. It is subject to a 30% corporate income taxrate. During 2016, Kittson earned net income of $67,000, and thefollowing events occurred:

Oct. 1Cash dividends of $3 per share on 4,000 shares of common stockwere declared.
Oct. 10October 1 declaration of dividends was paid.
Nov. 1A small stock dividend was declared. The dividends consisted of600 shares of $10 par common stock. On the date of declaration, themarket price of the company’s common stock was $36 per share.
Nov. 10November 1 declaration of dividends was paid.
Dec. 1The company recalled and retired 500 shares of $100 parpreferred stock. The call price was $125 per share; the stock hadoriginally been issued for $110 per share.
Dec. 31The company discovered that it had erroneously recordeddepreciation expense of $45,000 in 2015 for both financialreporting and income tax reporting. The correct depreciation for2015 should have been $20,000. This is considered a materialerror.

Required:

1.Prepare journal entries to record Kittson Company’stransactions during 2016.
2.Prepare Kittson’s statement of retained earnings for the yearended December 31, 2016.

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