Problem
The following are selected transactions for Medley Company for the year 2020.
Jan. 1 Issued 60,000 shares of $4 par value common stock for $420,000 cash.
April 1 Purchased a machine with a list price of $54,000. Additional acquisition costs included sales taxes $3,000; freight charges $2,000; oil and lubricants to run the machine for the current period $1,000; installation charges $1,500: freight insurance charges $300; insurance on the machine for two years $1,500; and testing charges to make sure that the machine is properly functioning $200. The company paid $11,500 cash and signed a one year, 10% note for the remaining amount of the machine's cost. The expected useful life of the machine is 10 years, with an expected salvage value $5,000. The company selected the straight-line method to depreciate the machine.
Nov. 1 Called back 40% of its outstanding bonds at 103. At start of 2020, the bonds had a face value of $6,000,000 with 10 years of life left. The bonds have stated rate of 6% and pay interest every November 1.
Nov. 5 Issued 5,500 shares of 8%, $50 par value preferred stock for $300,000 cash.
Dec. 14 Declared total cash dividends on the preferred stock, and $120,000 dividends on common stock for the year.
Task
Compose the journal entries to record the events of 2020.
• Prepare any necessary adjusting entries needed on December 31, 2020, end of accounting period.