Reference no: EM132591218

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

Preferred Stock, 6%, $50 par $600,000

Common Stock, $5 par 800,000

Paid-in Capital in Excess of Par-Preferred Stock 200,000

Paid-in Capital in Excess of Par-Common Stock 300,000

Retained Earnings 800,000

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

July 1 Declared a $0.60 cash dividend per share on common stock.

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

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

Dec. 1 Declared a 15% stock dividend on common stock when the market price of the stock was $18 per share.

Dec. 15 Declared a 6% cash dividend on preferred stock payable January 15, 2018.

Dec. 31 Determined that net income for the year was $355,000.

Dec. 31 Recognized a $200,000 restriction of retained earnings for plant expansion.

Instructions - Journalize the transactions, events, and closing entries for net income and dividends.