E11-2 Reporting Stockholders' Equity and Determining Dividend Policy [LO 11-2, LO 11-3]

[The following information applies to the questions displayed below.] Incentive Corporation was authorized to issue 12,000 shares of common stock, each with a $1 par value. During its first year, the following selected transactions were completed:

1. Issued 5,400 shares of common stock for cash at $24 per share.
2. Issued 1,400 shares of common stock for cash at $27 per share.

E11-2 Part 1

Required:

1. Complete the table below, indicating the account, amount, and direction of the effect for the above transactions. (Enter any decreases to account balances with a minus sign.)
2. Prepare the journal entry required for each of these transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
3. Prepare the stockholders equity section as it should be reported on the year-end balance sheet. At year-end, the accounts reflected net income of $200.
4. Incentive Corporation has $46,000 in the companys bank account. At year-end, the accounts reflected a profit of $200. What is the maximum amount of cash dividends the company can declare and distribute?