During 20X5, Walter Ltd. retired 4,000 common shares and 2,000 preferred shares, respectively. Earnings were $100,000 in 20X5, and dividends declared, $40,000. The comparative equity accounts for 20X4 and 20X5:

Required:
1. Calculate the original average issue price of the common and preferred shares.
2. Prepare the journal entries that were used to record the retirement.
3. Calculate the amount paid for the retired common and preferred shares.

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Balances 31 December Preferred shares Common shares Contributed capital, retirement of preferred shares Retained earnings 20X5 $ 360,000 1,200,000 54,000 270,000 20X4 $ 460,000 1,400,000 240,000