Santiago Corp., a private corporation, received its articles of incorporation on January 3, 2014. It is authorized to issue an unlimited number of common shares and $1 preferred shares. It had the following share transactions during the year:
Jan. 12 Issued 50,000 common shares for $5 per share.
24 Issued 950 common shares in payment of a $4,500 bill for legal services.
July 11 Issued 1,000 preferred shares for $25 per share.
Oct. 1 Issued 10,000 common shares in exchange for land. The land's fair value was estimated to be $55,000. Santiago's accountant estimated that the fair value of the shares issued might be as high as $6 per share.
Instructions
(a) Journalize the share transactions.
(b) Calculate the average cost for the common shares.
(c) Assume instead that Santiago's shares trade on the TSX Venture Exchange. How might this affect the value assigned to the shares issued on October 1?