Sloboda Corporation was organized in 2013. At December 31, 2013, Sloboda Corporation's balance sheet reported the following shareholders' equity:

Preferred shares, $0.20, 50,000 shares authorized, none issued....................$ 0

Common shares, 100,000 shares authorized, 10,000 shares issued

and outstanding......................................................................87,500

Retained earnings (Deficit).......................................................(20,000)

Total shareholders' equity.........................................................$67,500

Required

1. What does the $0.20 mean for the preferred shares? If Sloboda Corporation issued 4,000 preferred shares, how much in cash dividends will Sloboda Corporation expect to pay per year?

2. At what average price per share did Sloboda Corporation issue the common shares?

3. Were first-year operations profitable? Give your reason.

4. During 2014, the company completed the following selected transactions. Journalize each transaction. Explanations are not required.

a. Issued for cash 10,000 preferred shares at $2.50 per share.

b. Issued for cash 1,000 common shares at a price of $9.00 per share.

c. Issued 25,000 common shares to acquire a building valued at $235,000.

d. Net income for the year was $62,500, and the company declared no dividends. Make the closing entry for net income.

5. Prepare the shareholders' equity section of the Sloboda Corporation balance sheet at December 31, 2014.