Anderson Corporation was organized early in 2000. The articles of incorporation authorize 30,000 shares of $100 par value, 10% cumulative preferred stock and 600,000 shares of $5 par value common stock. The following transactions affecting stockholders’ equity were completed during the first year:
1. Issued 50 shares of preferred stock at par value as payment for legal services.
2. Issued 4,000 shares of common stock at $20 per share and 800 shares of preferred stock at par.
3. Exchanged 10,000 shares of common stock for land with an appraised value of $120,000 and a building with an appraised value of $90,000
4. Declared the required cash dividend on preferred stock and a $2 per share dividend on common stock.
5. Closed the $200,000 credit balance in the Income Summary Account.
Required
a. Prepare journal entries to record these transactions.
b. Prepare the stockholders’ equity section of the balance sheet.