This problem continues our accounting for Aqua Elite, Inc. from Chapter 9. Aqua Elite, Inc. has been authorized to sell 500,000 common shares and 100,000 8% preferred shares. During the year, Aqua Elite had the following transactions related to shareholders’ equity:

May 5 Issued 5,700 common shares to Mike Hanson in exchange for $15,000 cash and a truck valued at $13,500.

Jun 13 Issued an additional 2,000 shares to Mike Hanson for $10,000 cash.

Jul 18Sold 4,000 common shares to investors for $45,000.

Aug 6Sold 1,500 preferred shares to investors for $20,000.

Oct 22 Purchased 1,000 common shares for $12 per share to hold in the company’s treasury.

Nov 14 Declared a $5,000 dividend payable on December 15 to shareholders on record on December 1. Used separate payable accounts for preferred and common dividends.

Dec 15 Paid the dividend.
Requirements
1. Record the transactions in the journal. Explanations are not required.

2. Prepare the shareholders' equity section of the balance sheet at December 31, 2014, assuming Aqua Elite, Inc. earned $96,000 of net income during the year. In addition to the dividends paid on December 15, $3,400 of dividends were paid earlier in the year.