E$15\mathrm{.}18($LO $1,2,3,4)$ Groupwork $($Dividends and Stockholders$$ Equity Section$)$ Anne Cleves

Company reported the following amounts in the stockholders$$ equity section of its December $31,2019,$

balance sheet.

Preferred stock, $10\%,$ $$100$ par $(10,000$ shares

authorized, $2,000$ shares issued$)$ $$200,000$

Common stock, $$5$ par $(100,000$ shares authorized,

$20,000$ shares issued$)100,000$

Additional paid$-$in capital $125,000$

Retained earnings $450,000$

Total $$875,000$

During $2020,$ Cleves took part in the following transactions concerning stockholders$$ equity.

$1.$ Paid the annual $2019$ $$10$ per share dividend on preferred stock and a $$2$ per share dividend on com$-$

mon stock. These dividends had been declared on December $31,2019.$

$2.$ Purchased $1,700$ shares of its own outstanding common stock for $$40$ per share. Cleves uses the cost

method.

$3.$ Reissued $700$ treasury shares for land valued at $$30,000.$

$4.$ Issued $500$ shares of preferred stock at $$105$ per share.

$5.$ Declared a $10\%$ stock dividend on the outstanding common stock when the stock is selling for

$$45$ per share.

$6.$ Issued the stock dividend.

$7.$ Declared the annual $2020$ $$10$ per share dividend on preferred stock and the $$2$ per share dividend

on common stock. These dividends are payable in $2021.$

Instructions

a$.$ Prepare journal entries to record the transactions described above.

b$.$ Prepare the December $31,2020,$ stockholders$$ equity section. Assume $2020$ net income was

$$330,000$