The equity section of Yes Theory Inc. on January 1, 2020, were as follows.

Share Capital - Preference (9%, $50 par, cumulative, 10,000 shares authorized) $400,000 Share Capital - Ordinary ($1 stated value, 2,000,000 shares authorized) 1,000,000 Share Premium - Preference 100,000 Share Premium - Ordinary 1,450,000 Retained Earnings 1,816,000 Treasury Shares - Ordinary (20,000 shares) 50,000 .

During 2020, the company had the following transactions and events pertaining to its equity.

Feb. 1 Issued 30,000 ordinary shares for $120,000. Apr. 14 Sold 9,000 treasury shares - ordinary for $42,000. Sept. 3 Issued 7,000 ordinary shares for the treasury at a cost of $6,000. Nov. 10 Purchased 1,000 ordinary shares for the treasury at a cost of $6,000. Dec. 31 Determined that net income for the year was $452,000. No dividends were declared during the year.

Instructions:

a. Journalize the transactions and the closing entry for net income.

b. Prepare an equity sections at December 31, 2020, including the disclosure of the preference dividends in arrears.