ABC Inc. was incorporated on 1/15/12. Their corporate charter authorized the following capital stock:
Preferred Stock: 7%, par value $100 per share, 100,000 shares.
Common Stock: $1 par value, 500,000 shares.
The following transactions occurred during the year:
1/19/12 %u2013 Issued 100,000 shares of common stock for $17 cash per share.
1/31/12 %u2013 Issued 3,000 shares of preferred stock for $115 cash per share.
11/1/12 %u2013 Repurchased 30,000 shares of common stock for $22 cash per share.
12/1/12 %u2013 Declared and paid a total dividend of $95,000.
Required:
1. Prepare the journal entry for each transaction listed above.
2. In your own words, explain the main differences between common and preferred stock.