Question

The articles of incorporation for Juniper Tile Ltd. Authorize the company to issue 500,000, $6 preferred shares and 1,500,000 common shares. During its first year of operations, Juniper Tile Ltd. completed the following transactions:

2019

Jan 4​Issued 100,000 common shares receiving cash of $800,000.

Jan 13​Issued 6,000 preferred shares receiving cash of $80,000

Jan 14​Issued 10,000 common shares in exchange for equipment valued at $70,000

Required:

(a) Record the transactions in the general journal

(b) Prepare the shareholders equity section of Magic Systems Ltd. balance sheet at December 31. 2019 assuming the company earned $285,000 in net income during it’s first year of operations.

Answer 1

(a)

Date	Account Titles	Debit	Credit
Jan-04	Cash	$       800,000
	Common Shares		$       800,000
Jan-13	Cash	$         80,000
	Preferred Shares		$         80,000
Jan-14	Equipment	$         70,000
	Common Shares		$         70,000

(b)

Shareholders Equity
Paid in Capital
Common Shares	$       870,000
Preferred Shares	$         80,000
Total Paid in Capital	$      950,000
Retained Earnings	$       285,000
Total Shareholders Equity	$   1,235,000