Lincoln-Priest, Inc., was organized in 2011. At December 31, 2011, the Lincoln-Priest balance sheet reported the following stockholders equity:

LINCOLN-PRIEST, INC.

Stockholders’ Equity

December 31, 2011

Paid-in Capital:

Preferred stock, 7%, $40 par, 110,000 shares authorized, none issued$0

Common stock, $1 par, 520,000 shares authorized, 61,000 shares issued

and outstanding $61,000

Paid-in capital in excess of par – common 41,000

Total paid-in capital $102,000

Retained earnings 29000

Total stockholders’ equity $131,000

Requirements:

1. During 2012, the company completed the following selected transactions.

Journalize each transaction. Explanations are not required.

a. Issued for cash 1,300 shares of preferred stock at par value.

b. Issued for cash 2,400 shares of common stock at a price of $5 per share.

c. Net income for the year was $74,000, and the company declared no dividends.

Make the closing entry for net income.

2. Prepare the stockholders equity section of the Lincoln-Priest balance sheet at

December 31, 2012.