3. On January 2, 2014, Rodman Corporation began operations. Its articles of incorporation authorize it to issue an unlimited number of common shares and 500 000, $3 noncumulative preferred shares. In its first year 2014, the company had the following selected transactions:

Jan. 2	Issued 50 000 common shares to Rhonda Rodman for $10 cash per share.
Jan. 10	Issued 1500 common shares to Rhondas brother in exchange for a used vehicle. The vehicle was appraised at $15 000
June 30	Declared a $0.25 dividend to the common shareholders of record on July 1, payable July 5.
July 5	Paid the common share dividend.
Oct. 1	Issued 1 000 preferred shares to Rodmans grandmother for $60 cash per share.
Dec. 30	Declared the $0.75 quarterly preferred share dividend, and a $0.25 common share dividend. Both dividends are payable on January 5 to the shareholders of record on January 1.

During 2014, the company had Service Revenue of $240 000, and Operating Expenses of $180 000. The company has a 15% income tax rate and did not make any installments during the year.

Instructions

1. Journalize the transactions (ignore the revenue and expenses).

2. Prepare an income statement and record the journal entry to record the income tax expense.

3. Prepare a statement of retained earnings and the shareholders equity section of the balance sheet.

4. Prepare closing entries.