(Part Level Submission) The stockholders' equity accounts of Karp Company at January 1, 2017, are as follows.

Preferred Stock, 6%, $50 par $635,000

Common Stock, $5 par 790,000

Paid-in Capital in Excess of Par-Preferred Stock 200,500

Paid-in Capital in Excess of Par-Common Stock 286,500

Retained Earnings 758,500

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

July 1 Declared a $0.80 cash dividend per share on common stock.

Aug. 1 Discovered $21,500 understatement of depreciation expense in 2016. (Ignore income taxes.)

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

Dec. 1 Declared a 10% stock dividend on common stock when the market price of the stock was $15 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 $374,000.

Dec. 31 Recognized a $195,000 restriction of retained earnings for plant expansion.

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