Ava School of Learning obtained a charter at the start of 2017 that authorized 50,000 shares of no-par value common shares and 20,000 no-par value preferred shares. During 2017, the following selected transactions occurred:

a. Collected $40 cash per share from four individuals and issued 5,000 common shares to each

b. Issued 6,000 shares of common shares to an outside investor at $40 cash per share Issued 8,000 shares of preferred shares at $20 cash per share

Required:

1. Give the journal entries indicated for each of these transactions.

2. Prepare the shareholders’ equity section of the balance sheet at December 31, 2017. At the end of 2017, the accounts reflected net income of $36,000. No dividends were declared.