Chapter 15, Problem 15.12E

Preferred Stock Issuance Dividends, Disclosure. Rory Storm Roofing and Siding, Inc. reported the following shareholders’ equity section as of the beginning of the current year:

Stockholders’ Equity
Contributed Capital:
Common Stock. $2 par value. 2,350,000 shares authorized and 745,000 shares issued, and 691,500 shares outstanding	$ 1,490,000
Additional Paid-in Capital in Excess of Par - Common	20,115,000
Total Contributed Capital	$21,605,000
Retained Earnings	$ 7,658,450
Accumulated Other Comprehensive Income (Loss)	897,945
Less: Treasury Stock (53,500 common shares at cost)	(1,070,000)
Total Stockholders’ Equity	$29,091,395

Rory Storm a so issued 823,000 shares of its $5 par value preferred stock. There is a 6% dividend rate on the preferred shares that Rory Storm issued at $11 per share. The company paid $180,000 in underwriting fees to issue the shares. It reported $2,633,000 in net income for the year and declared and paid dividends of $1 per share on its common shares and 6% of par for the preferred shares. The company has 1,000,000 shares authorized for preferred stock.

Required

1. a. Prepare the journal entry required to record the preferred stock issue.
2. b. Prepare the journal entries required to record the declaration and payment of the cash dividends.
3. c. Prepare the stockholders’ equity section of the balance sheet at the end of the year.