Lane Corporation was authorized to issue 100,000 shares of \(\$ 5\) par common stock and 20,000 shares of \(\$ 100\) par, 6 percent, cumulative preferred stock. Lane Corporation completed the following transactions during its first two years of operation:

Required
a. Prepare journal entries for these transactions for 2011 and 2012 and post them to T-accounts.
b. Prepare the stockholders' equity section of the balance sheet at December 31, 2011.
c. Prepare the balance sheet at December \(31,2012\).

Transcribed Image Text:

2011 Jan. 2 15 Feb. 14 Dec. 31 2012 Issued 15,000 shares of $5 par common stock for $7 per share. Issued 2,000 shares of $100 par preferred stock for $110 per share. Issued 20,000 shares of $5 par common stock for $9 per share. During the year, earned $310,000 of cash revenues and paid $240,000 of cash operating expenses. 31 Declared the cash dividend on outstanding shares of preferred stock for 2011. The dividend will be paid on January 31 to stockholders of record on January 15, 2012. 31 Closed revenue, expense, and dividend accounts to the retained earnings account. Jan. 31 Mar. 1 June 1 Paid the cash dividend declared on December 31, 2011. Issued 3,000 shares of $100 par preferred stock for $120 per share. Purchased 500 shares of common stock as treasury stock at $10 per share. Dec. 31 During the year, earned $250,000 of cash revenues and paid $175,000 of cash operating expenses. 31 Declared the dividend on the preferred stock and a $0.50 per share dividend on the common stock. 31 Closed revenue, expense, and dividend accounts to the retained earnings account.