Partners Pat and Quincy wish to avoid the unlimited personal liability of the partnership form of business,

Question:

Partners Pat and Quincy wish to avoid the unlimited personal liability of the partnership form of business, so they are incorporating the company as P & Q Services, Inc. The charter from the state of Texas authorizes the corporation to issue 25,000 shares of 5%, $100 par preferred stock and 300,000 shares of no-par common stock. In its first month, P & Q Services, Inc., completed the following transactions:

Requirements

1. Record the transactions in the journal.

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

Jan 3 Issued 6,100 shares of common stock to Pat and 3,600 shares to Quincy, both for cash of $5 per share.

12 Issued 900 shares of preferred stock to acquire a patent with a market value of $90,000.

22 Issued 1,400 shares of common stock to other investors for $5 cash per share.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... 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...