Solar Energy Company is authorized by its charter to issue 500,000 shares of $10 par value common stock and 100,000 shares of 10%, noncumulative and nonparticipating, $100 par value preferred stock. The company completed the following transactions: 2011 Feb. 5 Issued 70,000 shares of common stock at par for cash. 28 Gave the corporation?s promoters 3,750 shares of common stock for their services in organizing the corporation. The directors valued the services at $40,000. Mar. 3 Exchanged 44,000 shares of common stock for the following assets with the indicated reliable market values: land, $80,000; buildings, $210,000; and machinery, $155,000. Dec. 31 Closed the Income Summary account. A $27,000 loss was incurred. 2012 Jan. 28 Issued 4,000 shares of preferred stock at par for cash. Dec. 31 Closed the Income Summary account. A $98,000 net income was earned. 2013 Jan. 1 The board of directors declared a 10% cash dividend to preferred shares and $0.20 per share cash dividend to outstanding common shares, payable on February 5 to the January 24 stockholders of record. Feb. 5 Paid the previously declared dividends. Dec. 31 Closed Income Summary accounts. A $159,000 net income was earned. Required: 1. Prepare general journal entries to record the transactions. 2. Prepare the stockholders? equity section of a balance sheet as of the close of business on December 31, 2013.

Solar Energy Company Date (2011) Feb. 5 Accounts and Explanation Cash Debit $700,000.00 Common Stock to record the issue of 70,000 shares of common stock Feb. 28 Service Expense $700,000.00 $40,000.00 Common Stock to record 3,750 shares given to corporate promoters Mar. 3 Land Buildings Machinery $40,000.00 $80,000.00 $210,000.00 $155,000.00 Common Stock Paid In-Capital In Excess of Par Issued 44,000 shares of common stock at 10$ par value in exchange for land ($80,000), buildings ($210,000) and machinery ($155,000) Dec. 31 Retained Earnings $440,000.00 $5,000.00 $27,000.00 Income Summary to close Income Summary Date (2012) Jan. 28 Accounts and Explanation Cash $27,000.00 Debit $400,000.00 Preferred Stock to record the issue of 4,000 preferred shares at par Dec. 31 Income Summary Feb. 5 Dec. 31 Accounts and Explanation Dividends Dividends Payable-Common (70,000 shares x .20 = 14,000) Dividends Payable-Preferred (4,000 shares x $100 x .10 = $40,000) to declare payable dividends Dividends Payable-Common Dividends Payable-Preferred Cash paid Jan. 1 dividends Income Summary Retained Earnings to close Income Summary Credit $400,000.00 $98,000.00 Retained Earnings to close Income Summary Date (2013) Jan. 1 Credit $98,000.00 Debit $54,000.00 Credit $14,000.00 $40,000.00 $14,000.00 $40,000.00 $54,000.00 $159,000.00 $159,000.00 Solar Energy Company Balance Sheet as of December 31, 2013 Stockholders' Equity Contributed capital Preferred Stock, $100 par value, 9% non-cumulative & non participating 100,000 shares authorized, 4,000 shares issued and 96,000 outstanding Common Stock, $10 par value, 500,000 shares authorized, 70,000 issued and shares outstanding Additional Paid-in-capital Total Contributed Capital Retained Earnings Total Contributed Capital and Retained Earnings Total Stockholder's equity 22,250 $400,000.00 $700,000.00 $56,000.00 $756,000.00 $1,156,000.00 $230,000.00 $1,386,000.00 $1,386,000.00