Question

Problem 1: Pires corporation was organized on January 1, 2020. It is authorized to issue 20,000 shares of 6%, $40 par value preferred stock, and 500,00 shares of no-par common stock with a stated value of $2 per share. The following stock transactions were completed during the first year.

Jan. 10 Issued 100,000 shares of common stock for cash at $3 per share.

Mar. 1 Issued 10,000 shares of preferred stock for cash at $55 per share.

Apr. 1 Issued 25,000 shares of common stock for land. The asking price of the land was $90,000.

The company’s estimate of fair value of the land was $75,000.

May. 1 Issued $75,000 shares of common stock for cash at $4 per share.

Aug. 1 Issued 10,000 shares of common stock to attorneys in payment of their bill for $50,000

for service performed in helping the company organize.

Sept. 1 Issued 5,000 shares of common stock for cash at $6 per share. Nov. 1 Issued 2,000 shares of preferred stock for cash at $60 per share. Dec. 1 Purchased 1000 shares of treasury stock for $30 per share

Dec. 31 Net income for 2020 was $141,000

Journalize the transactions and closing entries.

Post to the stockholders’ equity accounts (Use J1 as the posting reference) and make T

accounts

Prepare the statement of stockholder’s equity at December 31, 2020

Answer 1