Franko Company. was incorporated on 2/01/14. Their corporate charter authorized the following capital stock:

Franko Company. was incorporated on 2/01/14. Their corporate charter authorized the following capital stock:

 Preferred Stock: 7%, par value $105 per share, 120,000 shares.

 Common Stock: $5 par value, 1,000,000 shares.

The following transactions occurred during the year:

3/15/14 – Issued 200,000 shares of common stock for $18 cash per share.

4/25/14 – Issued 7,000 shares of preferred stock for $125 cash per share.

8/16/14 – Repurchased 40,000 shares of common stock for $25 cash per share.

10/5/14 – Declared dividend of $150,000. 

Required: 

1. Prepare the journal entry for each transaction listed above.

2. In your own words, explain the main differences between common and preferred stock.