Major League Apparel has two classes of stock authorized: 5%, $10 par preferred, and $1 par value common. The following transactions affect stockholders' equity during 2012, its first year of operations:
January2 Issue 100,000 shares of common stock for $60 per share.
February 14 Issue 50,000 shares of preferred stock for $11 per share.
May8 Repurchase 10,000 shares of its own common stock for $50 per share.
May31 Reissue 5,000 shares of treasury stock for $55 per share.
December 1 Declare a cash dividend on its common stock of $0.50 per share and a $25,000 (5% of par value) cash dividend on its preferred stock payable to all stockholders of record on December 15. The dividend is payable on December 30. (Hint: Dividends are not paid on treasury stock.)
December 30 Pay the cash dividends declared on December 1
Required:
1. Record each of these transactions.
2. Prepare the stockholders' equity section of the balance sheet as of December 31, 2012. Net income for the year was $480,000.