Shareholders' Equity Part A: When Bouncy Corporation was formed on January 2, 2019, the corporate charter authorized the issuance of 5,000,000 shares of common stock carrying a $1 par value, and 1,000,000 shares of $5 par value, cumulative, nonparticipating preferred stock. On January 5, 2020, 3,000,000 shares of the common stock are issued in exchange for cash at an average price of $10 per share. Also, on January 2, all 1,000,000 shares of preferred stock are issued at $20 per share. During 2020, the Bouncy Corporation participated in three treasury stock transactions: a. On February 20, 2020, the corporation reacquires 200,000 shares for the treasury at a price of $12 per share. b. On March 10, 2020, 50,000 treasury shares are reissued at $15 per share. c. On March 18, 2020, 40,000 treasury shares are reissued at $10 per share. On March 30, 2020, the Bouncy Corporation declares a $.05 per share cash dividend on common stock and a $.25 per share cash dividend on preferred stock. Payment is scheduled for June 1, 2016, to shareholders of record on May 15, 2020. Required: 1. Prepare journal entries to record these transactions. 2. Prepare the Bouncy Corporation shareholders' equity section as it would appear in a balance sheet prepared at March 30, 2020. (Assume net income for the first quarter was $1,000,000.) Suppose Bouncy Co. declared a 5% common stock dividend instead of a cash dividend on March 30, 2020 when the common stock was trading at $10 per share. Assume a $.25 per share cash dividend was declared for preferred stock on the same date. What entry would Bouncy Co. make? Part B: After understanding the problem above and why those entries and statement were prepared as they were, indicate by letter whether each of the transactions listed below increases (0), decreases (D), or has no effect (N) on the three equity accounts shown in the table. Assume the shareholders' equity of Bouncy Company includes only common stock, paid-in capital excess of par, and retained earnings at the time of each transaction. Transactions Commo Additiona Retaine n Stock PIC Earning a. b. Sale of common stock at greater than par Purchase of treasury stock at a cost less than the original issue price Purchase of treasury stock at a cost greater than the original issue price Declaration of a property dividend Sale of treasury stock for more than cost Sale of treasury stock for less than cost d. e. f. h. Closing out of net income for the year Declaration of a cash dividend Payment of a previously declared cash dividend Issuance of convertible bonds for cash Declaration and distribution of a 5% stock dividend k. OI Retirement of common stock at a cost less than the original issue price Retirement of common stock at a cost greater than the original issue price m n. A stock split effected in the form of a stock dividend Do. An even exchange of common stock for equipment at fair value that is greater than the stock's par value