Settlers of Catan Co is authorized to issue an unlimited number of common shares and 10,000 preferred shares. During its first year, the business completed the following share issuance transactions:

• July 19: Issued 10,000 common shares for cash of $6.50 per share.
• Oct 3: Issued 500, $1.50 preferred shares for $50,000 cash.
• Oct 11: Received inventory valued at $11,000 and equipment with fair value of $8,500 for 3,300 common shares. 

1. Journalize the transactions. Explanations are not required.
2. Prepare the shareholders' equity section of Settlers of Catan Co's balance sheet. The ending balance of Retained Earnings is a deficit of $42,000. 

Answer rating: 100% (QA)

Answer Journal Entries Date Account Debit Credit July 19 Cash 65000 Common Shares 65000 Oct 3 Cash 5... View the full answer