(Learning Objective 2: Issuing stock and reporting stockholders’ equity) Burgers & Fries, Inc., is authorized to issue 100,000 shares of common stock and 5,000 shares of preferred stock. During its first year, the business completed the following stock issuance transactions:
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July 19 |
Issued 10,000 shares of $2.50 par common stock for cash of $6.50 per share. |
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Oct . 3 |
Issued 500 shares of $1.50 no par preferred stock for $50,000 cash. |
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11 |
Received inventory valued at $11,000 and equipment with market value of $8,500 for 3,300 shares of the $2.50 par common stock. |
Required
1. Journalize the transactions. Explanations are not required.
2. Prepare the stockholders’ equity section of Burgers & Fries’ balance sheet. The ending balance of retained earnings is a deficit of $42,000.