Shelby Corporation was organized in January 2013 to operate an air conditioning sales and service business. The charter issued by the state authorized the following capital stock: Common stock, $1 par value, 200,000 shares. Preferred stock, $10 par value, 6 percent, 50,000 shares. During January and February 2013, the following stock transactions were completed:
a. Collected $100,000 cash and issued 10,000 shares of common stock.
b. Issued 10,000 shares of preferred stock at $20 per share; collected in cash. Net income for 2013 was $40,000; cash dividends declared and paid at year-end were $12,000. Required: