The Equitee Corporation was incorporated on January 2, 2019, with two classes of share capital: an unlimited number of common shares and $3 cumulative non-voting preferred shares with an authorized limit of 50,000. During the first year of operations, the following transactions occurred: 1. The company issued 3,400 preferred shares for a total of $85,000 cash, and 10,400 common shares for $23 per share. 2. It issued 3,200 common shares in exchange for a parcel of land with an estimated fair market value of $112,000. 3. The company had sales of $1,068,000 and incurred operating expenses of $943,000 during the year. 4. No dividends were declared during the first year of operations. During the second year of operations, the following transactions occurred: 5. In November, the company's board of directors declared cash dividends sufficient to pay a dividend of $4 on each common share. The dividends were payable on December 14. (Hint: Remember that no dividends can be paid on the common shares until the dividends in arrears and the current dividends on the preferred shares are paid.) 6. In December, the cash dividends from November were paid. 7. In December, the board of directors declared and distributed a 10% stock dividend on the common shares. The estimated market value of the common shares at the time was $24 per share. 8. The company had sales of $1,200,000 and incurred $1,025,000 in operating expenses during the second year. Prepare journal entries to record the above transactions, including closing entries for net income and dividends declared in transactions 3,5,7, and 8. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.) Debit Credit No. Account and explanation Year 1 Cash 324,200 Dividends Declared - Preferred Shares 85,000 Dividends Declared - Common Shares 239,200 Land 112,000 Dividends Declared - Common Shares 112,00 Sales Revenue 1,068,000 Income Summary 1,068,000 (To close revenue account.) Income Summary 943,000 Operating Expenses 943,000 (To close expense account.) Income Summary 125,000 Retained Earnings 125,000 (To close net income.) 4. No Entry No Entry "ear 2 5. Retained Earnings 20,400 Dividends Declared - Preferred Shares 20,400 (To record dividends declared on preferred shares.) Retained Earnings 54,400 Dividends Declared - Common Shares 54,400 (To record dividends declared on common shares.) 6. Dividends Declared 74,800 Cash 74,800 7. Retained Earnings 31,280 Dividends Declared - Common Shares 31,280 (To record stock dividends declared.) Dividends Declared - Common Shares 31,280 Cash 31,280 (To record stock dividends distributed.) Sales Revenue 1,200,000 Income Summary 1,200,000 (To close revenue account.) Income Summary 1,025,000 Operating Expenses 1,025,000 (To close expense account.) Income Summary 175,000 Retained Earnings 175,000 (To close net income.) (To close dividends declared.) Use a spreadsheet or table format like the one in the first practice problem to track the changes in all of the shareholders' equity accounts over the two-year period. (If an amount reduces the account balance then enter with negative sign, e.g.-15,000 or in parenthesis, e.g. (15,000).) Preferred Shares Common Shares Retained Earnings Shares issued Shares issued Net income 2019 Pref. dividends Common dividends Stock dividends Net income 2020 Prepare the shareholders' equity section of the statement of financial position at the end of the second year. Equitee Corporation Shareholders' Equity December 31, 2020