The 2012 annual report for Sneer Corporation disclosed that the company declared and paid preferred dividends in the amount of $230,000 in 2012. It also declared and paid dividends on common stock in the amount of $1.70 per share. During 2012, Sneer had 1 million common shares authorized; 430,000 shares had been issued; and 217,000 shares were in treasury stock. The balance in Retained Earnings was $770,000 on December 31, 2011, and 2012 Net Income was $270,000.
1. Prepare journal entries to record the declaration, and payment, of dividends on (a) preferred and (b) common stock
2. Using the information given above, prepare a statement of retained earnings for the year ended December 31, 2012.