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

The charter for Watkins Inc. authorizes the company to issue 500,000 shares of $8, nopar preferred stock and 1,200,000 shares of common stock with $5 par value. During its start-up phase, Watkins Inc. completed the following transactions:

2014 Apr 6 12 14 Issued 500 shares of common stock to the promoters who organized the corporation, receiving cash of $17,000.

Issued 600 shares of preferred stock for cash of $32,000.

Issued 1,600 shares of common stock in exchange for land with a market value of $24,000.

Requirements 1. Record the transactions in the journal.

2. Prepare the stockholders’ equity section of Watkins’s balance sheet at December 31, 2014. Assume that the company earned net income of $42,000 during this period.

AppendixLO1