On Januray 5, 2014, Elizabeth Company received a charter granting the right to issue 100,000 shares of $10 par value common stock and 20,000 shares of $50 par value, 8% stock. It then completed these transactions:
January, 11: Issued 50,000 shares of common stock and 5,000 shares of preferred stock for a lump sum of $1,500,000. After the issuance, the common stock is traded at $25 per share and the preferred stock at $62.50 per share.
July, 29: Purchased back 5,000 shares of common stock at $25 per share. (Use the cost method).
August, 10: Reissued 2,000 treasury shares at $30 per share.
October, 1: 2-for-1 stock split for common stock value reduced to $5.
Novermber, 1: Delcared a 5% stock dividend on outstanding common stock when the stock was selling for $20 per share.
December, 15: Stock dividend issued.
December, 30: Declared preferred dividend and a $0.50 per share cash dividend on the common stock.
December, 31: Net income in 2014 was $550,000 (close Income Summary to Retained Earnings).
Required:
Part: (1) Prepare Journal Entries to record the transactions listed above.
Part: (2) Prepare the stockholders' equity section of Elizabeth Company's balance sheet as of December 31, 2014.