The charter for Zycor, Inc. authorizes the company to issue 100,000 preferred shares and 500,000 common shares. During its start-up phase, Zycor, Inc. completed the following transactions:
Aug 6 Issued 500 common shares to the promoters who organized the corporation, receiving cash of $15,000.
12 Issued 300 preferred shares for cash of $20,000.
14 Issued 1,000 common shares in exchange for land valued at $26,000.
1. Record the transactions in the journal.
2. Prepare the shareholders’ equity section of Zycor’s balance sheet at December 31, 2014. Assume that the company earned net income of $25,000 during this period.