Ava School of Learning obtained a charter at the start of the year that authorized 50,000 shares of no-par common stock and 20,000 shares of preferred stock, par value $10. During the year, the following selected transactions occurred:

1. Collected $32 cash per share from four individuals and issued 4,200 shares of common stock to each.
2. Issued 5,200 shares of common stock to an outside investor at $32 cash per share.
3. Issued 7,200 shares of preferred stock at $17 cash per share.

Required:

1. Prepare the journal entries indicated for each of these transactions: record the issuance of 7,200 shares of preferred stock with a par value of $10 for a price of $17 per share.

2. Prepare the stockholders equity section of the balance sheet at December 31. At the end of the year, the accounts reflected a net income of $28,000. No dividends were declared.

AVA SCHOOL
Balance Sheet (Partial)
At December 31
Stockholders Equity
Contributed Capital:
Total Contributed Capital	0
Total Stockholders Equity	$0