Problem

The stockholders' equity accounts of Castle Corporation on January 1, 2017, were as follows.

Preferred Stock (8%, $50 par, cumulative, 11,000 shares authorized) $ 425,000
Common Stock ($1 stated value, 1,950,000 shares authorized) 1,150,000
Paid-in Capital in Excess of Par-Preferred Stock 105,000
Paid-in Capital in Excess of Stated Value-Common Stock 1,450,000
Retained Earnings 1,850,000
Treasury Stock (10,500 common shares) 42,000

During 2017, the corporation had the following transactions and events pertaining to its stockholders' equity.

Feb. 1 Issued 25,500 shares of common stock for $116,000.
Apr. 14 Sold 5,800 shares of treasury stock-common for $33,900.
Sept. 3 Issued 5,200 shares of common stock for a patent valued at $35,900.
Nov. 10 Purchased 1,100 shares of common stock for the treasury at a cost of $6,000.
Dec. 31 Determined that net income for the year was $450,000.

No dividends were declared during the year.

A: Journalize the transactions and the closing entry for net income.

B: Enter the beginning balances in the accounts, and post the journal entries to the stockholders' equity accounts.

C: Prepare a stockholders' equity section at December 31, 2017, including the disclosure of the preferred dividends in arrears.