Question - Elizabeth Company reported the following amounts in the stockholders' equity section of its December 31, 2012, balance sheet:

Preferred stock, 8%, $100 par (10,000 shares authorized, 200 shares issued: $200,000

Common Stock (100,000 authorized, 20,000 shares issued) 100,000

Additional paid in capital 125,000

Retained earnings 450,000

Total 875,000

During 2013, Elizabeth took part in the following transactions concerning stockholders equity:

1. Paid the annual 2012 $8.oo per share dividend on preferred stock and a $2 per share dividend on common stock. These dividends had been declared on Dec 31, 2012.

2. Purchased 2,700 shares of its own outstanding common stock for $40 per share. Elizabeth uses the cost method.

3. Reissued 700 treasury shares for land valued at $30,000.

4. Issued 500 shares of preferred stock at $105 per share.

5. Declared a 10% stock dividend on the outstanding common stock when the stock is selling for $45 per share.

6. Issued the stock dividend.

7. Declared the annual 2013 $8 per share dividend on preferred stock and the $2 per share dividend on common stock. These dividends are payable in 2014.

(a) Prepare journal entries to record the transactions described above.

(b) Prepare the December 31, 2013 stockholders equity section. Assume 2013 net income was $330,000.