Cutter Furniture, Inc., was organized in 2015. At December 31, 2015, Cutter Furniture, Inc.'s balance sheet reported the following stockholders' equity:

Requirement
Answer the following questions and make journal entries as needed:
1. What does the 8 percent mean for the preferred stock? After Cutter Furniture,
Inc., issues preferred stock, how much in annual cash dividends would it expect to pay on 5,000 shares?
2. At what average price per share did Cutter Furniture, Inc., issue the common stock during 2015?
3. Were the first-year operations profitable? Give your reasons.
4. During 2016, the company completed the following selected transactions.
Journalize each transaction. Explanations are not required.
a. Issued for cash 1,200 shares of preferred stock at par value
b. Issued for cash 1,500 shares of common stock at a price of $3 per share
5. Prepare the stockholders' equity section of the Cutter Furniture, Inc.'s balance sheet at December 31, 2016. Assume net income for the year was $81,000?

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Stockholders' Equity Paid-in Capital: Preferred Stock, 8%, $5 par, 50,000 shares authorized, none issued Common Stock, $1 par, 100,000 shares authorized, 12,000 shares issued and outstanding Paid-in Capital in Excess of Par-Common Total Paid-in Capital 12,000 42,000 $54,000 (7,500) $46,500 Retained Earnings (deficit) Total Stockholders' Equity