Partners Dempsey and Perry wish to avoid the unlimited personal liability of the partnership form of business,

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Partners Dempsey and Perry wish to avoid the unlimited personal liability of the partnership form of business, so they are incorporating the company as D & P Services, Inc. The charter from Ontario authorizes the corporation to issue 10,000 shares of 6%, preferred shares and 250,000 common shares. In its first month, D & P Services, Inc. completed the following transactions:

Jan 3 Issued 6,300 common shares to Dempsey and 3,800 shares to Perry, both for cash of $10 per share.

12 Issued 1,100 preferred shares to acquire a patent with a market value of $110,000.

22 Issued 1,500 common shares to other investors for $10 cash per share.

Requirements

1. Record the transactions in the journal.

2. Prepare the shareholders’ equity section of the D & P Services, Inc. balance sheet at December 31. The ending balance of Retained Earnings is $40,000.

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...
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Financial Accounting

ISBN: 978-0132889711

1st Canadian Edition

Authors: Jeffrey Waybright, Liang Hsuan Chen, Rhonda Pyper

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