During 2010 and 2011 the corporation completed the following transactions:

2010

January 1 Sold 50,000 common shares at $9.50 per share.

5 The directors declared the first cash dividend totalling $159,375 payable on Feb 28 to Feb 5 shareholders of record.

February 28 Paid dividends declared on January 5.

July 1 Issued preferred shares for a total of $405,000. The average issue price was $27.00 per share.

December 31 Closed dividend accounts along with Income Summary account, which reflected net income earned during 2010 of $640,000

2011

September 5 The directors declared a $1.50 cash dividend per preferred share and $0.75 per common share cash dividend payable on October 28 to October 5 shareholders of record.

October 28 Paid the dividends declared on September 5.

October 31 Closed the dividend accounts along with the $200,000 debit balance in the income summary account.

Required:

1. Prepare journal entries to record transactions and closings for 2010 and 2011.
2. Prepare the equity section of the company's Balance sheet as of December 31, 2011