Sampson Corporation was organized in 2014 to operate a financial consulting business. The charter authorized the issue of 12,000 common shares. During the first year, the following selected transactions were completed:
a. Issued 6,000 common shares for cash at $ 22 per share.
b. Issued 600 common shares for a piece of land to be used for a facilities site; construction began immediately. Assume that the market price per share was $ 22 on the date of issuance. Debit the land account.
c. Issued 1,000 common shares for cash at $ 23 per share.
d. At year-end, the statement of earnings showed a loss of $ 7,000. Because a loss was incurred, no income tax expense was recorded.
1. Prepare the journal entry required for each of these transactions.
2. Prepare the shareholders’ equity section as it should be reported on the statement of financial position at year- end, December 31, 2014.
3. Can Sampson pay dividends at year- end? Explain.