Part A

Required part A

1. Answer the questions.
2. Prepare the journal entries required on November 1, 2021, the date when You and Greg transfer the assets of your respective businesses into Sunrise Bakery Inc.
3. Assume that Sunrise Bakery Inc. Issues 1,000 $0.50 noncumulative preferred shares to Gregs dad and the same number to Your parents, in both cases for $5,000. Also assume that Sunrise Bakery Inc. issues 750 common shares to its lawyer. Prepare the journal entries for each of these transactions. They all occurred on November 1.
4. Prepare the opening balance sheet for Sunrise Bakery Inc. as of November 1, 2021, including the journal entries in (B) and (C) above.

Gregs Journal Entries
Date		Debit	Credit
11/01/21	Cash	$9,500
	Accounts Receivable	$210
	Inventory	$650
	Equipment	$2,500
	Other Assets	$1,480
	Common Stock		$14,340
11/01/21	Cash	$5,000
	Non-Cumulative Preference Stock		$5,000
11/01/21	Lawyer Fees	$750
	Common Stock		$750
Jessicas Journal Entries
Date		Debit	Credit
11/01/21	Cash	$11,650
	Accounts Receivable	$985
	Inventory	$2,800
	Equipment	$1,850
	Other Assets	$840
	Common Stock		$18,125
11/01/21	Cash	$5,000
	Non-Cumulative Preference Stock		$5,000
11/01/21	Lawyer Fees	$750
	Common Stock		$750

Sunrise Bakery Inc.
Opening Balance Sheet
Assets:
Cash	31,150
Accounts Receivable	1,195
Inventory	3,450
Equipment	4,350
Other Assets	2,320
Total Assets	$42,465
Liabilities	0
Equity:
Common Stock	33,215
Non-Cumulative Preferred Stock	10,000
Lawyer Fees	(750)
Total Liabilities and Equity	$42,465

Part B

After establishing your companys fiscal year-end to be October 31, you and Greg begin operating Sunrise Bakery Inc. on November 1, 2021. On that date, after the issuance of shares, the paid-in capital section of the companys balance sheet is as follows.

Paid-in capital

Preferred stock, $0.50 noncumulative, no par value,

10,000 shares authorized; 2,000 shares issued $10,000

Common stock, no par value, 100,000 shares

Authorized; 33,215 shares issued 33,215

Sunrise Bakery Inc. has the following selected transactions during its first year of operations.

Dec. 1 Issues an additional 900 preferred shares to your sibling for $4,500.

Apr. 30 Declares a semiannual dividend to the preferred stockholders of record on May 15, payable on June 1.

June 30 Repurchases 750 shares of common stock issued to the lawyer, for $500. Recall that these were originally issued for $750. The lawyer had decided to retire and wanted to liquidate all of her assets.

Oct. 31 The company has had a very successful first year of operations. It earned revenues of $468,500 and incurred expenses of $366,050 (including $750 legal fee but excluding income tax).

31 Records income tax expense. (The company has a 20% income tax rate.)

31 Declares a semiannual dividend to the preferred stockholders of record on November 15, payable on December 1.

Required

1. Prepare the journal entries to record the above transactions.
2. Prepare the retained earnings statement for the year.
3. Prepare the stockholders equity section of the balance sheet as of October 31.
4. Prepare closing entries.