Ava School of Learning obtained a charter at the start of 2017 that authorized 50,000 shares of

Question:

Ava School of Learning obtained a charter at the start of 2017 that authorized 50,000 shares of no-par value common shares and 20,000 no-par value preferred shares. During 2017, the following selected transactions occurred:

a. Collected $40 cash per share from four individuals and issued 5,000 common shares to each

b. Issued 6,000 shares of common shares to an outside investor at $40 cash per share Issued 8,000 shares of preferred shares at $20 cash per share

Required:

1. Give the journal entries indicated for each of these transactions.

2. Prepare the shareholders’ equity section of the balance sheet at December 31, 2017. At the end of 2017, the accounts reflected net income of $36,000. No dividends were declared.

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...

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