B.

Underwood Corporation showed the following equity account balances on December 31, 2020,

Preferred shares, $5 cumulative, 10,000 shares authorized $0

Common Shares, unlimited shares authorized, 5,000 issued and outstanding

575,000

Retained Earnings

650,000

Total Equity

$1,225,000

In 2021 Underwood Corporation completed the following transactions:

Jan 5 Purchased and retired 1,000 common shares at $118 per share

Jan 8 The board of directors declared a 10% share dividend for the common shares they were trading at $120 per share that day. They will be distributed on January 25^th to the January 12^th shareholders on record.

Jan 25 Distributed the share dividend

Mar 9 Issued 1,000 preferred shares for $200 per share.

May 1 The board of directors declares total dividends of $15,000 payable on May 20^th to the May 10^th shareholders on record.

May 20 Distributed the dividend declared on May 1

Dec 31 Close the corporation Income Summary account that had a credit balance of $275,000.

Dec 31 Close the dividend accounts the Income Summary account at the end of 2021. Prepare all the appropriate closing entries.

1. Prepare the general journal entries to record the above transactions.

2. Prepare the Statement of Changes in Equity for Palliser Company at December 31, 2021.

3. Prepare the Shareholders' Equity section of the balance sheet of Palliser Corporation at December 31, 2021.