Chapter 11, Problem 16E

Preparing a Statement of Retained Earnings and Partial Balance Sheet and Evaluating Dividend Policy

The following account balances were selected from the records of beverage maker Blake Corporation at December 31 after all adjusting entries were completed:

Common stock (par $15; authorized 100,000 shares, issued 35,000 shares, of which 1,000 shares are held as treasury stock)	$525,000
Additional paid-in capital—common stock	180,000
Dividends	28,000
Retained earnings, beginning of year	76,000
Treasury stock at cost (1,000 shares)	20,000

Net income for the year was $48,000.

Required:

1. 1. Prepare the statement of retained earnings for the year ended December 31 and the stockholders’ equity section of the balance sheet at December 31.
2. 2. Determine the number of shares of stock that received dividends.
3. 3. Compute the ROE ratio for the current year, assuming total stockholders’ equity was $629,000 on December 31 of the previous year.