(Learning Objective 2: Recording corporate transactions and preparing the stockholders’ equity section of the balance sheet) The charter from the state of Utah authorizes Challenger Canoes, Inc., to issue 10,000 shares of 6%, $100 par preferred stock and 100,000 shares of $1 par common stock. In its first month, Challenger completed the following transactions:
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Oct. 6 |
Issued 300 shares of common stock to the lawyer for assistance with chartering the corporation. The lawyer’s fee was $1,500. Debit Organization Expense. |
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9 |
Issued 9,000 shares of common stock to Jerry Grant and 12,000 shares to Sheila Hoffman in return for cash equal to the stock’s market value of $5 per share. Grant and Hoffman are executives of the company. |
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10 |
Issued 400 shares of preferred stock to acquire a patent with a market value of $40,000. |
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26 |
Issued 2,000 shares of common stock for cash of $12,000. |
Required
1. Record the transactions in the journal.
2. Prepare the stockholders’ equity section of the Challenger balance sheet at October 31. The ending balance of Retained Earnings is $49,000.