Amber Wilson, owner of Canyon Canoe Company, decides to start a new company that will be operated as a corporation, Outdoor Equipment Incorporated (OEI). This company will sell outdoor clothing and equipment. The articles of incorporation for OEI authorize the company to issue 500,000 preferred shares that pay a dividend of $4.00 per year and 1,000,000 common shares.

OEI had the following select transactions in 2022:

Jan. 1 Issued 50,000 common shares for a total of $200,000.

10 Issued 2,000 preferred shares in exchange for land with a market value of $70,000.

Dec. 15 Declared total cash dividends of $15,000.

31 Paid the cash dividends.

Required

1. Journalize the transactions.

2. Calculate the balance in Retained Earnings on December 31, 2022. Assume net income for the year was $417,000.

3. Prepare the shareholders’ equity section of the balance sheet as of December 31, 2022.

This exercise continues recordkeeping for the Canyon Canoe Company. Students do not have to complete prior exercises in order to complete this question.