Rhonda Martin organized the Millennium Corporation early in 2012.On January 9, the corporation issued to Ms. Martin and other investors 50,000 of its unlimited authorized common shares of stock at a price of $18 per share. They also issued 20,000 of its unlimited preferred shares at a price of $25 per share.

During their first quarter the company made a net income of $42,000. As a result, on June 15, 2012 the board of directors declared a cash dividend of $0.15 per common share, payable July 1, 2012 in addition to preferred share dividends of $0.50 per share.

1.Prepare the journal entries to record the following: (9 Marks)

(a) the issuance of the common stock

(b) the issuance of the preferred stock

(c) the declaration of the dividend on June 15.

(d) the payment of the dividend on July 1.

2. Discuss why Ms. Martin might have made the decision to form a corporation rather than a sole proprietorship. (5 Marks)