Davis Corp. completed the following transactions in 2010, the first year of operation.

1. Issued 30,000 shares of $20 par common stock for $30 per share.

2. Issued 5,000 shares of $50 par, 4 percent, preferred stock at $51 per share.

3. Paid the annual cash dividend to preferred shareholders.

4. Issued a 5 percent stock dividend on the common stock. The market value at the dividend declaration date was $40 per share.

5. Later that year, issued a 2-for-1 split on the 31,500 shares of outstanding common stock.

6. Earned $195,000 of cash service revenues and paid $120,000 of cash operating expenses.

Required

a. Record each of these events in a horizontal statements model like the following one. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Use NA to indicate that an element is not affected by the event.

b. Prepare the stockholders' equity section of the balance sheet at the end of2010.

Assets = Liab. + Equity Rev.-Exp. = Net Inc. | Cash Flow PIC in PIC in Pfd. Stk +Com. Stk. + Excess PS Excess CS Ret. Earn