The balance sheet of Video Library, Inc., at December 31, 19X7, reported 10,000 shares of \(\$ 0.50\), no-par preferred stock authorized and outstanding. The preferred was issued in 19X1 at \(\$ 8\) per share. Video Library also had 500,000 shares of \(\$ 1\) par common stock authorized with 100,000 shares issued. Paid-in Capital in Excess of Par-Common had a balance of \(\$ 300,000\). Retained Earnings had a balance of \(\$ 18,000\), and the preferred dividend for \(19 \mathrm{X} 7\) was in arrears. During the two-year period ended December 31, 19X9, the company completed the following selected transactions:

\section*{\(19 \mathrm{X} 8\)}

Feb. 15 Purchased 5,000 shares of the company's own common stock for the treasury at \(\$ 4\) per share.

Apr. 2 Declared the cash dividend on the preferred stock in arrears for \(19 \times 7\) and the current cash dividend on preferred. The date of record was April 16, and the payment date was May 1 .

May 1 Paid the cash dividends.

2 Purchased and retired all the preferred stock at \(\$ 7.50\) per share.

Dec. 31 Earned net income of \(\$ 61,000\) for the year.

\(19 \mathrm{X} 9\)

Mar. 8 Sold 2,000 shares of treasury common stock for \(\$ 7\) per share.

Sep. 28 Declared a 10 -percent stock dividend on the outstanding common stock to holders of record October 15, with distribution set for October 31. The market value of Video Library's common stock was \(\$ 5\) per share.

Oct. 31 Issued the stock dividend shares.

Nov. 5 Split the common stock 2 for 1 by calling in the 109,700 shares of old \(\$ 1\) par common stock and issuing twice as many shares of \(\$ 0.50\) par common. (Stock splits affect all issued stock, including treasury stock and stock that is outstanding.)

Dec. 31 Earned net income of \(\$ 73,000\) during the year.

\section*{Required}

1. Record the transactions in the general journal. Explanations are not required.

2. Prepare the stockholders' equity section of the balance sheet at two dates: December 31, 19X8, and December 31, 19X9.