Partners Meeks and Olsen wish to avoid the unlimited personal liability of the partnership form of business,

Question:

Partners Meeks and Olsen wish to avoid the unlimited personal liability of the partnership form of business, so they are incorporating the company as M & O Services, Inc. The charter from Alberta authorizes the corporation to issue 15,000 shares of 7%, preferred shares and 220,000 common shares. In its first month, M & O Services, Inc. completed the following transactions:

Jan 3 Issued 6,200 common shares to Meeks and 3,700 shares to Olsen, both for cash of $12 per share.

12 Issued 1,200 preferred shares to acquire a patent with a market value of $180,000.

22 Issued 1,700 common shares to other investors for $12 cash per share.

Requirements

1. Record the transactions in the journal.

2. Prepare the shareholders’ equity section of the M & O Services, Inc. balance sheet at December 31. The ending balance of Retained Earnings is $59,000.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...