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Hammond Manufacturing Inc. was legally incorporated on January 2, 2020. Its articles of incorporation granted it the right to issue an unlimited number of common shares and 100,000 shares of $14.8 non-cumulative preferred shares. The following transactions are among those that occurred during the first three years of operations: 2020 Jan. 12 Issued 40,200 common shares at $5.2 each. 20 Issued 10,000 common shares to promoters who provided legal services that helped to establish the company. These services had a fair value of $40,000. 31 Issued 84,000 common shares in exchange for land, building, and equipment, which have fair market values of $364,000, $484,000, and $52,000, respectively. Mar. 4 Purchased equipment at a cost of $8,200 cash. This was thought to be a special bargain price. It was felt that at least $11,200 would normally have had to be paid to acquire this equipment. Dec. 31 During 2020, the company incurred a loss of $100,000. The Income Summary account was closed. 2021 Jan. 4 Issued 3,000 preferred shares at $90 per share. Dec. 31 The Income Summary account was closed. Profit for 2021 was $220,000. 2022 Dec. 4 The company declared a cash dividend of $0.52 per share on the common shares payable on December 18 and also declared the required dividend on the preferred shares. 18 Paid the dividends declared on December 4. 31 Profit for the year ended December 31, 2022, was $209,040. The Income Summary account was closed. Required: 1. Journalize the transactions for the years 2020, 2021, and 2022. The company does not use a cash dividends account. View transaction list :X 1 Record the issuance of shares. 10 2 Record the issuance of shares in exchange for organization efforts. 3 Record the exchange of shares for PPE assets. 4 Record the purchase of equipment. Credit 5 Record to close the income summary account. 6 Record the issuance of preferred shares. 7 Record to close the income summary account. Note : = -journal entry has been entered 8 Record the declaration of dividends. 9 Record the payment of dividends. 10 Record to close the income summary account. Note : = journal entry has been entered 2. Prepare the statement of changes in equity for the year ended December 31, 2022. (Amounts to be deducted should be indicated by a minus sign.) HAMMOND MANUFACTURING INC. Statement of Changes in Equity For Year Ended December 31, 2022 Preferred Common Shares Shares Retained Earnings Total Equity Balance, January 1 Balance, December 31 $ 0 $ 0 $ 0 $ 0 3. Prepare the equity section on the December 31, 2022, balance sheet. HAMMOND MANUFACTURING INC. Equity Section of the Balance Sheet December 31, 2022 Contributed capital: Total contributed capital 0 Total equity 0 Analysis Component: Determine the net assets of Hammond Manufacturing Inc. for 2020, 2021, and 2022. Is the trend favourable or unfavourable? 2020 2021 2022 Net assets Trend
