Question

On January 2, 2011, Blueman Corporation was incorporated in the province of Ontario. It was authorized to issue an unlimited number of no-par value common shares, and 25,000 shares of no-par, $8, cumulative and non-participating preferred.   During 2011, the firm completed the following transactions:

Jan 8        Accepted subscriptions for 34,000 common shares at $12 per share. Down payment received on the subscribed shares was 50%.

Jan 30      Issued 10,000 preferred shares in exchange for the following assets: machinery with a fair market value of $50,000, a factory with a fair market value of $200,000, and land with an appraised value of $120,000.

Mar 15      Machinery with a fair market value of $85,000 was donated to the company.

Apr 25      Collected the balance of the subscriptions receivable on only 30,000 shares and issued common shares. A customer defaulted on the last payment on a subscription for 4,000 shares. The company policy is to issue the proportion paid up to date for customers that default.

June 30    Purchased 2,200 common shares at $18 per share. The shares were retired.

Dec 31     Declared sufficient cash dividends to allow a $1 per share dividend for outstanding common shares. The dividend is payable on January 10, 2012, to shareholders of record on January 5, 2012.

Dec 31     Closed the income summary to retained earnings. The income for the period was $225,000.

Required:

1. ( Prepare the journal entries to record the above transactions.
2. (Prepare the shareholders’ equity section of the balance sheet for Blueman Corporation at December 31, 2011.

Answer 1