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Problem #2 This is a continuation of problem #1. Forever Young has two classes of stock authorized: $100 par preferred and $1 par value common. As of the beginning of 2021, no preferred stock has been issued and 5,000 shares of common stock have been issued. The following transactions affect stockholders' equity during 2021: January 10 Issue 1,000 additional shares of common stock for $30 per share. March 1 Issue 1,000 shares of preferred stock for $105 per share. July 1 Declare a cash dividend of $5 per share on preferred stock and $1.25 per share on common stock to all stockholders of record on July 15. July 31 Pay the cash dividend declared on July 1. October 10 Purchase 500 shares of treasury stock for $25 per share. November 1 Resell 200 shares of the treasury stock purchased on October 10 for $26 per share. Forever Young has the following beginning balances in its stockholders' equity accounts on January 1, 2021: Preferred stock, $0; common stock, $5,000; additional paid-in capital, $20,000; and retained earnings, $10,000. Net income for the year ended December 31, 2021, is $16,000. Required: Taking into consideration the beginning balances and all of the transactions during 2021, prepare the following: 1. The stockholders' equity section as of December 31, 2021. 2. The statement of stockholders' equity for the year ended December 31, 2021. Solution: Forever Young Balance Sheet (partial) December 31, 2021 Stockholders' equity: Preferred stock, $100 par value Common stock, $1 par value Additional paid-in capital Total paid-in capital Retained earnings Treasury stock Total stockholders' equity Forever Young Statement of Stockholders' Equity For the year ended December 31, 2021 Additiona Total Preferred Common 1 Retained | Treasury | Stockholders' Stock Stock Paid-in Earnings Stock Equity Capital Balance, January 1 Issue common stock Issue preferred stock Cash dividends Purchase treasury stock Resell treasury stock Net income Balance December 31