Settliff Company is authorized by its charter to issue 700,000 shares of \(\$ 10\) par value common stock and 35,000 shares of \(11 \%\), cumulative and nonparticipating, \(\$ 100\) par value preferred stock. The company completed the following transactions:

\section*{1989}
June 6 Issued 35,000 shares of common stock at par for cash.
29 Gave the corporation's promoters 4,500 shares of common stock for their services in getting the corporation organized. The directors valued the services at \(\$ 50,000\).
July 2 Exchanged 90,000 shares of common stock for the following assets at fair market values: land, \(\$ 200,000\); buildings, \(\$ 420,000\); and machinery, \(\$ 300,000\).
Dèc. 31 Closed the Income Summary account. A \(\$ 50,000\) loss was incurred.
1990 Jan. 24 Issued 2,500 shares of preferred stock at par.
Feb. 20 Accepted subscriptions to 7,000 shares of common stock at \(\$ 15.20\) per share. Down payments of \(30 \%\) accompanied the subscription contracts.
Dec. 31 Closed the Income Summary account. A \(\$ 175,000\) net income was earned.
1991 Jan. 3 The board of directors declared an \(11 \%\) dividend to preferred shares and \(\$ 0.70\) per share to outstanding common shares, payable on February 3 to the January 24 stockholders of record.
Feb. 3 Paid the previously declared dividends.
May 20 Settliff Company's convertible bonds payable with par value of \(\$ 100,000\) (plus unamortized premium of \(\$ 7,500\) ) were submitted for conversion into common shares on this date. The bondholders accepted 10,500 shares of Settliff's common stock in conversion of these bonds.
Dec. 31 Closed the Dividends Declared and Income Summary accounts. A \(\$ 275,000\) net income was earned.
Problem 12-6