Reference no: EM133018378

Question - Sarasota Company reported the following amounts in the stockholders' equity section of its December 31, 2019, balance sheet.

Preferred stock, 9%, $100 par (10,000 shares authorized, 1,800 shares issued) $180,000

Common stock, $5 par (101,500 shares authorized, 20,300 shares issued) $101,500

Additional paid-in capital $130,000

Retained earnings $486,000

Total $897,500

During 2020, Sarasota took part in the following transactions concerning stockholders' equity.

1. Paid the annual 2019 $9 per share dividend on preferred stock and a $2 per share dividend on common stock. These dividends had been declared on December 31, 2019.

2. Purchased 1,800 shares of its own outstanding common stock for $41 per share. Sarasota uses the cost method.

3. Reissued 700 treasury shares for land valued at $31,400.

4. Issued 510 shares of preferred stock at $104 per share.

5. Declared a 10% stock dividend on the outstanding common stock when the stock is selling for $45 per share.

6. Issued the stock dividend.

7. Declared the annual 2020 $9 per share dividend on preferred stock and the $2 per share dividend on common stock. These dividends are payable in 2021.

Required -

1. Prepare journal entries to record the transactions described above.

2. Prepare the December 31, 2020, stockholders' equity section. Assume 2020 net income was $333,000.