Bayless EV is a startup founded in 2018 in Windsor by a group of young engineers working out of a garage. The company has an unlimited number of common shares authorized, and 90,000 preferred shares with a $2 dividend rate authorized. The following transactions took place during the first year of operations (2018) with respect to these shares (Bayless follows ASPE):

(1) On Jan. 15, 12,000 common shares were sold by subscription to 4 employees, who each purchased 3,000 shares for $20 per share. 20% of the amount was paid in cash immediately. The balance was to be paid by December 31, 2019, at which time the shares would be issued.

(2) On Jan. 20, Bayless paid $10,000 to its accountants for their work on the issuance of common shares. As well, an invoice for legal fees related to the issue of common shares was received for $25,100.

(3) On March. 1, 45,000 common shares were sold by subscription to 9 Windsor residents, who each purchased 5,000 shares for $22 per share. 20% of the amount was paid in cash immediately, with the balance to be paid by December 31, 2018. Shares were to be issued when the full payment was received.

(4) On Mar. 3, 30,000 common shares were sold by an underwriter to a university endowment fund for $25 per share. The underwriter charged Bayless a 3% commission on the sale.

(5) On Nov. 23, Bayless sold a bundle of shares, including 3,000 common shares and 2,000 preferred to a wealthy family, for a total of $155,000. The fair value of the preferred shares was difficult to determine, but the most recent sale of common shares was used to estimate the value of the common share portion of the transaction.

(6) On Dec. 31, of the 9 Windsor residents that subscribed for common shares on March 1, 6 paid the balance of the purchase price, and 3 subscribers defaulted. According to the subscription contract, the latter would not be issued shares and no cash would be refunded.

(a) Prepare the journal entries to record the transactions for the year 2018.

(b) Prepare the shareholders’ equity section of the statement of financial position as of December 31, 2018.