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.
Required:
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.