Stock issuance (Learning Objectives 3 & 7) 10–15 min.

Partners Rodriguez and Salizar wish to avoid the unlimited personal liability of the partnership form of business, so they are incorporating the company as R & S Services, Inc.

The charter from the state of Texas authorizes the corporation to issue 100,000 shares of 6%, $80 par preferred stock and 500,000 shares of no-par common stock. In its first month, R & S Services, Inc., completed the following transactions:

Jan 3 12 22 Issued 4,800 shares of common stock to Rodriguez and 3,600 shares to Salizar, both for cash of $12 per share.

Issued 1,200 shares of preferred stock to acquire a patent with a market value of

$96,000.

Issued 1,500 shares of common stock to other investors for $14 cash per share.

Requirements 1. Record the transactions in the journal.

2. Prepare the stockholders’ equity section of the R & S Services, Inc.’s balance sheet at December 31. The ending balance of Retained Earnings is $103,000.

AppendixLO1