Lane Corporation was authorized to issue 100,000 shares of \($5\) par common stock and 20,000 shares of \($100\) par, 6 percent, cumulative preferred stock. Lane Corporation completed the following transactions during its first two years of operation:

Required:

a. Organize the transaction data in accounts under an accounting equation.

b. Prepare the stockholders’ equity section of the balance sheet at December 31, 2006.

c. Prepare the balance sheet at December 31, 2007.

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2006 Jan. 2 15 Feb. 14 Dec. 31 31 Issued 15,000 shares of $5 par common stock for $7 per share. Issued 2,000 shares of $100 par preferred stock for $110 per share. Issued 20,000 shares of $5 par common stock for $9 per share. During the year, earned $310,000 of cash revenues and paid $240,000 of cash operating expenses. Declared the cash dividend on outstanding shares of preferred stock for 2006. The divi- dend will be paid on January 31 to stockholders of record on January 15, 2007.