P12-39B Lurvey-Priest, Inc., was organized in 2011. At December 31, 2011, the Lurvey-Priest balance

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P12-39B 3 Issuing stock and preparing the stockholders’ equity section of the balance sheet [15–20 min]
Lurvey-Priest, Inc., was organized in 2011. At December 31, 2011, the Lurvey-Priest balance sheet reported the following stockholders’ equity:

LURVEY-PRIEST, INC.  Stockholders’ Equity  December 31, 2011
	Paid-in Capital:
	Preferred stock, 4%, $55 par, 140,000 shares authorized, none issued	$0
	Common stock, $2 par, 540,000 shares authorized, 62,000 shares issued and outstanding	124,000
	Paid-in capital in excess of par—common	42,000
	Total paid-in capital	$ 166,000
	Retained earnings	28,000
	Total stockholders’ equity	$ 194,000

Requirements

1. During 2012, the company completed the following selected transactions. Journalize each transaction. Explanations are not required.
a. Issued for cash 1,500 shares of preferred stock at par value.
b. Issued for cash 2,000 shares of common stock at a price of $7 per share.
c. Net income for the year was $78,000, and the company declared no dividends. Make the closing entry for net income.

2. Prepare the stockholders’ equity section of the Lurvey-Priest balance sheet at December 31, 2012.