Business case (100 points)

At the beginning of 2019, Melville Inc. showed the following amounts in the stockholders equity section of its balance sheet:

Stoskholders'equity:

Capital stock, 2& par value, 200,000 shares authorized

100,000 issued and outstanding 200.000

Additional paid-in capital: capital stock 2.000.000

Total paid-in capital 2.200.000

Retained earnings 1.500.000

Total shareholders' equity 3.700.000

Transactions related to the shareholders equity during the year are as follows:

Jan. 2nd : Declared a dividend of 2$ per share to stockholders of record on January 31, payable on February 13.

Feb. 13 : Paid the cash dividend declared on January 3.

March 15: The Company purchased 1,000 shares of its own capital stock at a price of $11 per share

April 25: Reissued 700 shares of Treasury stock at a price of 14 per share.

May 22nd : Declared a 5% stock dividend to stockholders on record at June 22 to be distributed on July 1st.

July 1st: Paid the dividends declared on May 22nd.

August 1st: reissued 100 of the 500 remaining shares of treasury stock at a price of $15 per share

September 1st: Issues 10,000 of 7% cumulative preferred stock with $1.000 face value.

December 31st: The income summary account, showing net income for the year of $1,340,000 was closed into the retained earnings account.

December 31st : The preferred stock dividends was closed into the retained earnings account

December 31st: The balance in the dividend account was closed into the retained earnings account.

a) Prepare in General Journal form the entries to record the above transactions. (60 points)

b) Prepare the stockholders equity section of the balance sheet as of December 31, 2019(20 points)

c) Compute the maximum cash dividend per share that legally could be declared at December 31, 2019. (20 points)