Journalize transactions, post, and prepare a stockholders' equity section; calculate ratios.

(LO 2, 3, 5, 7, 8), AP

The stockholders' equity accounts of Warden Corporation on January 1, 2014, were as follows.

Preferred Stock (9%, $50 par cumulative, 10,000 shares authorized)	$200,000
Common Stock ($1 stated value, 2,000,000 shares authorized)	1,000,000
Paid-in Capital in Excess of Par ValuePreferred Stock	16,000
Paid-in Capital in Excess of Stated ValueCommon Stock	1,400,000
Retained Earnings	1,716,000
Treasury Stock (8,000 common shares)	20,000

During 2014 the corporation had these transactions and events pertaining to its stockholders' equity.

Feb. 1	Issued 20,000 shares of common stock for $160,000.
Nov. 10	Purchased 4,000 shares of common stock for the treasury at a cost of $16,000.
Nov. 15	Declared a 9% cash dividend on preferred stock, payable December 15.
Dec. 1	Declared a $0.30 per share cash dividend to common stockholders of record on December 15, payable December 31, 2014.
Dec. 15	Paid the dividend declared on November 15.
31	Determined that net income for the year was $408,000. The market price of the common stock on this date was $5 per share. Paid the dividend declared on December 1.

Instructions

1.	Journalize the transactions. (Include entries to close net income and dividends to Retained Earnings.)

2.	Enter the beginning balances in the accounts, and post the journal entries to the stockholders' equity accounts. (Use T-accounts.)

3.

Prepare the stockholders' equity section of the balance sheet at December 31, 2014.

Tot. paid-in capital

$2,776,000

4.	Calculate the payout ratio, earnings per share, and return on common stockholders' equity. (Hint: Use the common shares outstanding on January 1 and December 31 to determine average shares outstanding.)