Incentive Corporation was organized as a corporation in 2008 to operate a financial consulting business. The charter authorized the following capital stock: common stock, par value $6 per share, 13,000 shares. During the first year, the following selected transactions were completed:
a. Sold and issued 5,700 shares of common stock for cash at $20 per share.
b. Sold and issued 2,500 shares of common stock for cash at $22 per share.
1. Give the journal entry required for each of these transactions
2. At year-end, the Income Summary account reflected a profit of $11,600. Give the journal entry to close this account to Retained Earnings.
3. Prepare the Stockholders' Equity section as it should be reported on the 2008 year-end balance sheet.
4. Incentive Corporation has $31,600 cash in the company's bank account. What is the maximum amount of cash dividends the company can declare at this time?