The partnership of Gomez and Salazar needed additional capital to expand into new markets, so the business incorporated as Tiempo Grande, Inc. The charter from the state of Arizona authorizes Tiempo Grande to issue 50,000 shares of 6 -percent, \(\$ 100\)-par preferred stock and 100,000 shares of no-par common stock with a stated value of \(\$ 5\) per share. In its first month, Tiempo Grande completed the following transactions:

Dec. 1 Paid a charter fee of \(\$ 200\) and incorporation taxes of \(\$ 6,100\) to the state of Arizona and paid legal fees of \(\$ 4,000\) to organize as a corporation.

2 Issued 300 shares of common stock to the promoter for assistance with issuance of the common stock. The promotional fee was \(\$ 1,800\).

2 Issued 9,000 shares of common stock to Gomez and 12,000 shares to Salazar in return for the net assets of the partnership. Gomez's capital balance on the partnership books was \(\$ 54,000\), and Salazar's capital balance was \(\$ 72,000\).

8 Received a parcel of land valued at \(\$ 92,000\) as a donation from the city of Tucson.

10 Issued 400 shares of preferred stock to acquire a patent with a market value of \(\$ 50,000\).

16 Issued 2,000 shares of common stock for cash of \(\$ 12,000\).

\section*{Required}

1. Record the transactions in the general journal.

2. Prepare the stockholders' equity section of the Tiempo Grande, Inc., balance sheet at December 31. The ending balance of Retained Earnings is \(\$ 42,100\).

Stockbolders' equity section of the balance sheet

(Obj. 3)


Analyzing the stockbolders' equity of an actual corporation

(Obj. 3, 5)