Question: National League Gear has two classes of stock authorized: 6%, $20 par preferred, and $5 par value common. The following transactions affect stockholders' equity during 2012, National League's first year of operations:
February 2 Issue 1 million shares of common stock for $25 per share.
February 4 Issue 500,000 shares of preferred stock for $22 per share.
June 15 Repurchase 100,000 shares of its own common stock for $20 per share.
August 15 Reissue 75,000 shares of treasury stock for $35 per share.
November 1 Declare a cash dividend on its common stock of $1 per share and a $600,000 (6% of par value) cash dividend on its preferred stock payable to all stockholders on record on November 15. (Dividends are not paid on treasury stock.)
November 30 Pay the dividends declared on November 1.
Required: 1. Record each of these transactions.
2. Prepare the stockholders' equity section of the balance sheet as of December 31, 2012. Net income for the year was $4,800,000.