The Grey Sky Company presented the following equity section of their balance sheet as of December 31, 2010, the end of its accounting year. Common stock, $1 par (10,000,000 shares authorized, 4,500,000 shares issued and outstanding) 4,500,000 Paid-in Capital in Excess of Par Common Stock 85,500,000 Preferred stock, 8%, $100 par (1,000,000 shares authorized, 250,000 shares issued and outstanding) 25,000,000 Paid-in Capital in Excess of Par Preferred Stock 6,250,000 Retained Earnings 45,000,000 $166,250,000 As of December 31, 2010, the common stock had a market value of $55 per share and the preferred stock had a market value of $110 per share. During 2011, the company took the following actions: 1. January 15: The board of directors authorized the payment of the annual cash dividend on preferred stock for 2011 to which the preferred shareholders are entitled. The payment is to be made to shareholders of record as of January 31. 2. February 15: The Company paid the dividend on preferred stock declared on January 15. 3. March 1: The board of directors authorized the Companys usual quarterly $0.75 per share cash dividend on common stock to shareholders of record as of March 15. 4. March 31: The Company paid the dividend on common stock declared on March 31. 5. April 1: The Company issued 500,000 shares of common stock at $57 per share. 6. May 1: The Company issued 50,000 shares of preferred stock at $120 per share. 7. June 1: The board of directors authorized the Companys usual quarterly $0.75 per share cash dividend on common stock to shareholders of record as of June 15. 8. July 1: The Company paid the common stock dividend declared on June 1. 9. August 1: The Company reacquired 25,000 shares of its own common stock for $52 per share. 10. September 1: The board of directors authorized the Companys usual quarterly $0.75 per share cash dividend on common stock to shareholders of record as of September 15. 11. October 1: The Company paid the common stock dividend declared on September 1. 12. October 1: The board of directors authorized a 5% stock dividend on the outstanding common stock to shareholders of record as of October 15. The market price of the stock was $54 per share on October 1 and $53 per share on October 15. 13. November 1: Issued the common stock dividend declared on October 1. The market price of the stock was $52 on November 1. 14. November 15: Exchanged 10,000 shares of treasury stock for the inventory of a small competitor in liquidation. The inventory originally cost the competitor $480,000 and had an appraised value of $550,000 on November 15. 15. November 15: Sold 5,000 shares of treasury stock at $50 per share. 16. December 1: The board of directors authorized the Companys usual quarterly $0.75 per share cash dividend on common stock to shareholders of record as of December 15. Instructions: Assume that the Company uses the cost method to account for treasury stock. Assume that the Companys net income for 2011 was $17,500,000. a) Prepare the journal entries to record the items listed above. b) Prepare the December 31, 2011 equity section of the balance sheet