Vanowski, Inc., was organized and authorized to issue 10,000 shares of

$100 par value, 9 percent preferred stock and 100,000 shares of no-par, $5 stated value common stock on July 1, 20xx. Stock-related transactions for Vanowski are as follows:

July 1 Issued 20,000 shares of common stock at $11 per share.

1 Issued 1,000 shares of common stock at $11 per share for services rendered in connection with the organization of the company.

2 Issued 2,000 shares of preferred stock at par value for cash.

10 Issued 5,000 shares of common stock for land on which the asking price was $70,000. Market value of the stock was $12. Management wishes to record the land at full market value of the stock.

Aug. 2 Purchased 3,000 shares of its common stock at $13 per share.

Aug. 10 Declared a cash dividend for one month on the outstanding preferred stock and $.02 per share on common stock outstanding, payable on August 22 to stockholders of record on August 12.
12 Date of record for cash dividends.
22 Paid cash dividends.
Required 1. Record the transactions in journal form.
2. Prepare the stockholders’ equity section of the balance sheet as it would appear on August 31, 20xx. Net income for July and August was $23,000.
3. User Insight: Calculate dividends yield, price/earnings ratio, and return on equity. Assume earnings per common share are $1.00 and market price per common share is $20. For beginning stockholders’ equity, use the balance after the July transactions.
4. User Insight: Discuss the results in requirement 3, including the effect on investors’ returns and the company’s profitability as it relates to stockholders’ equity