Dawls Corporation Reported Stockholders' Equity on December 31 of the Prior

question 3

Essay

Dawls Corporation reported stockholders' equity on December 31 of the prior year as follows:
$\begin{array}{|l|r|}\hline\begin{array}{l}\text { Common stock, } \$ 5 \text { par value, } 1,000,000 \text { shares authorized, } 500,000 \text { shares } \\\text { issued }\end{array} & \$ 2,500,000 \\\hline \text { Contributed capital in excess of par, common stock } & 1,000,000 \\\hline \text { Retained earnings } & 3,000,000\\\hline\end{array}$

The following selected transactions occurred during the current year:
$\begin{array}{|l|l|}\hline \text { Feb. 15 } & \begin{array}{l}\text { The board of directors declared a 5\% stock dividend to stockholders of record on } \\\text { March 1, payable March 20. The stock was selling for } \$ 8 \text { per share. }\end{array} \\\hline \text { Mar. 9 } & \text { Paid the stock dividend. } \\\hline \text { May 1 } & \begin{array}{l}\text { A cash dividend of } \$ 0.30 \text { per share was declared by the board of directors to } \\\text { stockholders of record on May 20, payable June 1. }\end{array} \\\hline \text { June 1 } & \text { Paid the cash dividend. } \\\hline \text { Aug . 20 } & \text { The board decided to split the stock 4-for-1, effective on September 1. } \\\hline \text { Sept. 1 } & \text { Stock split 4-for-1. } \\\hline \text { Dec. 31 } & \text { Earned a net income of } \$ 800,000 \text { for the current year. }\\\hline \end{array}$
Prepare a statement of retained earnings as of December 31 of the current year.

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Definitions:

Security Held

An investment owned by an individual or organization, including stocks, bonds, or any other investment vehicle.

Zero Variance

A statistical condition in which all data points in a set are identical, offering no variability among them.

Expected Returns

The expected yield from an investment, considering the likelihood of different results.

Positive Variance

The difference between actual performance and expected performance where the actual outcome is more favorable than what was anticipated.