Smart Tech Inc.’s shareholders’ equity on December 31, 2013, was as follows:

Shareholders’ Equity

Share Capital:

Preferred Shares, $1 accumulated deferred dividends,

150,000 shares authorized, 50,000 issued and outstanding....$1,000,000

Common Shares, unlimited number of shares authorized,

100,000 shares issued and outstanding........$2,000,000

Retained Earnings.................. 450,000

Total Shareholders’ Equity..............$3,450,000

During 2014, the following transactions occurred.

Jan 2 10,000 preferred shares were issued at $22.00 per share.

Feb 1 12,000 common shares were issued in exchange for a building with a fair value of $300,000.

Nov 25 Declared preferred dividends to be paid on December 23.

Dec 27 Declared 5% common stock dividend, when the market price was $25, to be distributed on January 30, 2015 Dec 31 Net income for the year was $520,000.

Requirements

1. Journalize the above transactions.

2. Prepare the shareholders’ equity section of the Smart Tech Inc. balance sheet as of December 31, 2014.