Baron Corporation Was Authorized by Its Charter to Issue 80,000

Baron Corporation was authorized by its charter to issue 80,000 shares of 12%,$100 par cumulative preferred stock and 200,000 shares of $1 par value common stock.In its first year of operations,Baron had the following transactions.
(1)Sold 50,000 shares of common stock for $300,000 on January 1.
(2)Sold 3,000 shares of preferred stock for $360,000 on January 1.
(3)Earned $185,000 for the sale of their merchandise of which $135,000 was on credit.
(4)Had expenses of $122,500 in connection with selling the merchandise.All expenses were paid in cash.
(5)Purchased 5,000 shares of outstanding common stock for $8.00 per share for the treasury.
(6)Declared a dividend of $.20 per share of common stock and for the amount due the preferred stock.
(7)Paid the required dividends.
Required:
(a)Prepare the necessary journal entries.
(b)Prepare the stockholders' equity section of the balance sheet.

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