he partnership of Nuan

Chu

and Jen

Tsang

needed additional capital to expand into new markets, so the business incorporated as

Gold

Services Inc. The articles of incorporation under the Canada Business Corporations Act authorize

Gold

Services Inc. to issue

650,000

$4.75

preferred shares and

3,200,000

common shares. In its first year,

Gold

Services Inc. completed the following share-related transactions:

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Required

1.	Record the transactions in the general journal.
2.	Prepare the shareholders' equity section of the Gold Services Inc. balance sheet at December 31, 2020. The ending balance in Retained Earnings is $210,000.

Requirement 1. Record the transactions in the general journal.

August 2. Paid incorporation fees of

$8,500

and paid legal fees of

$17,000

to organize as a corporation. (Record debits first, then credits. Exclude explanations from journal entries.)

Journal Entry
Date		Accounts	Debit	Credit
Aug.	2

August 2. Issued

30,000

common shares to

Chu

and

35,000

common shares to

Tsang

in return for cash.

Chu

paid

$225,000

cash, and

Tsang

paid

$262,500

cash.

Journal Entry
Date		Accounts	Debit	Credit
Aug.	2

December 10. Issued

1,200

preferred shares to acquire a computer system with a market value of

$103,200.

Journal Entry
Date		Accounts	Debit	Credit
Dec.	10

December 16. Issued

21,000

common shares for cash of

$210,000.

Journal Entry
Date		Accounts	Debit	Credit
Dec.	16

Requirement 2. Prepare the shareholders' equity section of the

Gold

Services Inc. balance sheet at December 31,

2020.

The ending balance in Retained Earnings is

$210,000.

Gold Services Inc.
Balance Sheet (partial)
December 31, 2020
Shareholders' Equity
	Contributed Capital:
	Total shareholders' equity

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Transactions

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2020
Aug.	2		Paid incorporation fees of $8,500 and paid legal fees of $17,000 to organize as a corporation.
	2		Issued 30,000 common shares to Chu and 35,000 commons shares to Tsang in return for cash. Chu paid $225,000 cash, and Tsang paid $262,500 cash.
Dec.	10		Issued 1,200 preferred shares to acquire a computer system with a market value of $103,200.