Dawls Corporation reported stockholders' equity on December 31 of the prior year as follows: Common stock, $5 par value, 1,000,000 shares
authorized 500,000 shares issued $2,500,000
Contributed capital In excess of par, common stock 1,000,000
Retained earnings 3,000,000

The following selected transactions occurred during the current year.

Feb. 15 The board of directors declared a 5% stock dividend to stockholders of record on March 1, payable March 20. The stock was selling for $8 per share.
March 9 Distributed the stock dividend.
May 1 A cash dividend of $.30 per share was declared by the board of directors to stockholders of record on May 20, payable June 1.
June 1 Paid the cash dividend.
Aug. 20 The board decided to split the stock 4-for-1, effective on September 1.
Sept. 1 Stock split 4-for-1.
Dec. 31 Earned a net income of $800,000 for the current year.

Required:
Prepare a statement of retained earnings as of December 31 of the current year.