1. On January 2, 2015, Easton Corporation issued 50,000 shares of 5% cumulative preferred stock at $100 par value. No dividends have been paid to any shareholders since the formation of the corporation. Management wants to issue a dividend to common shareholders on December 31, 2016. What dividend amount, if any, must be paid to the preferred stockholders entitled before any distribution is made to common stockholders?

2. On January 1, 2016, Towson Inc. issued $500,000, 20-year, 6% bonds at 101. Interest is payable semiannually on January 1 and July 1. The journal entry to record this transaction on January 1, 2016, is

3. Smith Ventures Inc. purchased 10% of the outstanding stock of Jones Company. Smith paid $15 per share to acquire 8,000 shares and will treat this purchase as available-for-sale securities. Par value of the stock is 50 cents. Smith uses a calendar year, and on December 31, the market value of Jones stock is $17 per share. What is the entry Smith needs to make on December 31?