Reference no: EM132855866

Question - Solar Energy Company is authorized by its charter to issue 500,000 shares of $10 par value common stock and 100,000 shares of 10%, noncumulative and non-participating, $100 par value preferred stock. The company completed the following transactions:

2018

Feb. 5 Issued 70,000 shares of common stock at par for cash.

Feb. 28 Gave the corporation's promoters 3,750 shares of common stock for their services in organizing the corporation. The directors valued the services at $40,000.

Mar. 3 Exchanged 44,000 shares of common stock for the following assets with the indicated reliable market values: land, $80,000; buildings, $210,000; and machinery, $155,000.

Dec. 31 Closed the Income Summary account. A $27,000 loss was incurred.

2019

Jan. 28 Issued 4,000 shares of preferred stock at par for cash.

Dec. 31 Closed the Income Summary account. A $98,000 net income was earned.

2020

Jan. 1 The board of directors declared a 10% cash dividend to preferred shares and $0.20 per share cash dividend to outstanding common shares, payable on February 5 to the January 24 stockholders of record.

Feb. 5 Paid the previously declared dividends.

Dec. 31 Closed Income Summary and the Dividends accounts. A $159,000 net income was earned.

Required -

1. How to prepare general journal entries to record the transactions.

2. How to prepare the stockholders' equity section of a balance sheet as of the close of business on December 31, 2020.