Cookies & Cakes Inc. is authorized to issue an unlimited number of common shares and 10,000 preferred shares. During its first year, the business completed the following share issuance transactions:

July 19 Issued 16,000 common shares for cash of $8.75 per share

Oct 3 Issued 800, $2.25 preferred shares for $80,000 cash

Oct 11 Received inventory valued at $13,000 and equipment with fair value of $9,500 for 3,400 common shares

Required:

1. Journalize the transactions
2. Prepare the shareholders equity section of Cookies & Cakes balance sheet. The ending balance of Retained Earnings is a deficit of $45,000