In the unit 2 assignment, we will record transactions that impact the equity section of the balance sheet. Corporations raise capital by selling stock in the corporation. The stockholders equity section contains a common stock account and an additional paid-in capital account. When stock is sold, the common stock account is credited for the par value of the stock sold and the additional paid-in capital is credited for the amount greater than par. Corporations can also issue a class of stock which typically carries unique features. This stock is known as preferred stock. Finally, corporations can declare dividends during the accounting period. Dividends represent payouts of a corporations earnings. Dividends are declared by the corporations Board of Directors. Dividends can be in various forms including cash, property, liquidating, and stock dividends. You will provide the journal entry to record issuing of common stock shares by a corporation, record issuing of cumulative preferred stock, and record a declaration of stock split. The unit 2 project has two parts. Part 1: Company A During 2018, Company A has the following transactions involving its common and preferred stock:

Issued 20,000 shares of $8 par common stock for $26 a share; brings total shares outstanding to 50,000 shares

Issued 6,000 shares of $100 par, 6%, cumulative preferred stock for $150 per share

When market value of the common stock reached $15 a share, Company A declared a 3-for-1 stock split, reducing the par value to $188 per share The following is required: 1. Prepare a journal entry for each transaction. 2. Discuss the right of shareholders of capital stock for company A that they are entitled to. 3. Company A is formed as a corporation and therefore, its shareholders have limited liability. Limited liability means that stockholders can only lose the amount of their investment. Discuss how this limited liability affects a corporation.