ABC Inc. was incorporated on 1/15/12. Their corporate charter authorized the following capital stock:

Preferred Stock: 7%, par value $100 per share, 100,000 shares.

Common Stock: $1 par value, 500,000 shares.

The following transactions occurred during the year:

1/19/12 - Issued 100,000 shares of common stock for $17 cash per share.

1/31/12 - Issued 3,000 shares of preferred stock for $115 cash per share.

11/1/12 - Repurchased 30,000 shares of common stock for $22 cash per share.

12/1/12 - Declared and paid a total dividend of $95,000.

Required:

1. Prepare the journal entry for each transaction listed above.

2. In your own words, explain the main differences between common and preferred stock.