III. Metro Company reported the following amounts in the stockholders equity section of its balance sheet on 12/31/x1, first year of operations:

Preferred stock, 10%, $100 par (10,000 shares

Authorized, 2,000 shares issued) $200,000

Common stock, $5 par (100,000 shares authorized,

20,000 shares issued)100,000 Paid-in Capital in Excess of Par Common125,000 Retained Earnings450,000

Total $875,000

During 20x2 and 20x3, Metro took part in the following transactions concerning stockholders equity.

1. Declared and paid the annual dividends of $50,000 for 20x2. The preferred stock is cumulative. Metro did not pay any dividend in 20x1. Divide the dividend between preferred stock and common stock, and make journal entries for each dividend.

2. Purchased 1,700 shares of its own outstanding common stock for $35 per share. Metro uses the cost method.

3. Reissued 700 treasury shares for land valued at $30,000.

4. Issued 500 shares of preferred stock at $106 per share.

5. Declared a 10% stock dividend on common stock when the stock is selling for $39 per share.

6. Issued the stock dividend.

7. Declared the annual dividends for 20x3: annual dividend on preferred stock and $1 per share dividend on common stock. These dividends are payable in 20x4. Prepare two separate journal entries; common and preferred dividend each.

Required:

(a) Prepare journal entries for these transactions.

(b) Prepare the 12/31/03, stockholders equity section. Assume 20x3 net income was $305,000 ($0 for 20x2).