The articles of incorporation for Novak Technology Inc. authorize the issuance of 100,000 preferred shares and 250,000

Question:

The articles of incorporation for Novak Technology Inc. authorize the issuance of 100,000 preferred shares and 250,000 common shares. During a two-month period, Novak Technology Inc. completed these share-issuance transactions:

Mar. 23 Issued 12,000 common shares for cash of $10.00 per share.

Apr. 12 Received inventory valued at $60,000 and equipment with a market value of $10,000 for 5,000 common shares.

17 Issued 1,500 $2.25 preferred shares. The issue price was cash of $11.00 per share.

Required

1. Journalize the transactions, with explanations.

2. Prepare the shareholders' equity section of the Novak Technology Inc. balance sheet for the transactions given in this exercise. Retained Earnings has a balance of $65,000.

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...