Partners Dempsey and Perry wish to avoid the unlimited personal liability of the partnership form of business, so they are incorporating the company as D & P Services, Inc. The charter from Ontario authorizes the corporation to issue 10,000 shares of 6%, preferred shares and 250,000 common shares. In its first month, D & P Services, Inc. completed the following transactions:

Jan 3 Issued 6,300 common shares to Dempsey and 3,800 shares to Perry, both for cash of $10 per share.

12 Issued 1,100 preferred shares to acquire a patent with a market value of $110,000.

22 Issued 1,500 common shares to other investors for $10 cash per share.

Requirements

1. Record the transactions in the journal.

2. Prepare the shareholders’ equity section of the D & P Services, Inc. balance sheet at December 31. The ending balance of Retained Earnings is $40,000.