Molina Corporation is authorized to issue 10,000 shares of $40 par value, 10% preferred stock and 200,000 shares of $5 par value common stock. On January 1, 2010, the ledger contained the following stockholders’ equity balances.

Preferred Stock (5,000 shares) ........... $200,000

Paid-in Capital in Excess of Par Value—Preferred .. 60,000

Common Stock (70,000 shares) ......... 350,000

Paid-in Capital in Excess of Par Value—Common .... 700,000

Retained Earnings ............... 300,000

During 2010, the following transactions occurred.

Feb. 1 Issued 1,000 shares of preferred stock for land having a fair market value of $65,000.

Mar. 1 Issued 2,000 shares of preferred stock for cash at $60 per share.

July 1 Issued 20,000 shares of common stock for cash at $5.80 per share.

Sept. 1 Issued 800 shares of preferred stock for a patent. The asking price of the patent was $60,000. Market values were preferred stock $65 and patent, indeterminable.

Dec. 1 Issued 10,000 shares of common stock for cash at $6 per share.

Dec. 31 Net income for the year was $210,000. No dividends were declared.

Instructions

(a) Journalize the transactions and the closing entry for net income.

(b) Enter the beginning balances in the accounts, and post the journal entries to the stockholders’ equity accounts. (Use J2 as the posting reference.)

(c) Prepare a stockholders’ equity section at December 31, 2010.