Norwest Products Inc., a wholesaler of office products, was organized on January 20 of the current year, with an authorization of 175,000 $1.50 preferred shares and unlimited common shares. The following selected transactions were completed during the first year of operations:
Jan. 20. Issued 250,000 common shares for $2,250,000 cash.
26. Issued 1,000 common shares to a lawyer in payment of $9,000 legal fees for organizing the corporation.
Feb. 6. Issued 32,000 common shares in exchange for land, buildings, and equip- ment with fair market prices of $90,000, $278,000, and $80,000, respectively.
Mar. 30. Issued 45,000 preferred shares at $48 per share for cash.
May 5. Declared a $125,000 cash dividend to be paid on July 15 to shareholders of record on June 20.
Dec. 31. Prepared closing entries for the dividends and for $538,356 net income.
Instructions
1. Journalize the transactions.
2. Prepare a statement of retained earnings for the year.
3. Prepare the shareholders' equity section of the balance sheet as at December 31.