Major League Apparel has two classes of stock authorized: 6%, $10 par preferred, and $1 par value common. The following transactions affect stockholders’ equity during 2021, its first year of operations:

January 2

Issue 110,000 shares of common stock for $70 per share.

February 14

Issue 60,000 shares of preferred stock for $12 per share.

May 8

Purchase 11,000 shares of its own common stock for $60 per share.

May 31

Resell 5,500 shares of treasury stock for $65 per share.

December 1

Declare a cash dividend on its common stock of $0.25 per share and a $36,000 (6% of par value) cash dividend on its preferred stock payable to all stockholders of record on December 15. The dividend is payable on December 30. (Hint: Dividends are not paid on treasury stock.)

December 30

Pay the cash dividends declared on December 1.

Required:

1. Record each of these transactions.

2. Prepare the stockholders’ equity section of the balance sheet as of December 31, 2021. Net income for the year was $490,000.