Summerborn Manufacturing Co. completed the following transactions during 2016:
Jan. 16 Declared a cash dividend on the 6%, $97 par noncumulative preferred stock (1,150 shares outstanding). Declared a $0.25 per share dividend on the 105,000 shares of $8 par value common stock outstanding. The date of record is January 31, and the payment date is February 15.
Feb. 15 Paid the cash dividends.
Jun. 10 Split common stock 2-for-1.
Jul. 30 Declared a 50% stock dividend on the common stock. The market value of the common stock was $11 per share.
Aug. 15 Distributed the stock dividend.
Oct. 26 Purchased 1,400 shares of treasury stock at $9 per share.
Nov. 8 Sold 700 shares of treasury stock for $11 per share.
30 Sold 500 shares of treasury stock for $6 per share.
1. Record the transactions in Summerborn’s general journal.
2. Prepare the Summerborn’s stockholders’ equity section of the balance sheet as of December 31, 2016. Assume that Summerborn was authorized to issue 1,500 shares of preferred stock and 500,000 shares of common stock. Both preferred stock and common stock were issued at par. The ending balance of retained earnings as of December 31, 2016, is $2,080,000.