P11-2 Recording Transactions Affecting Shareholders' Equity LO11-3, 11-7, 11-8 King Corporation began operations in January, year 1. The charter authorized the following share capital: Preferred shares: 8 percent, $22 par value, authorized 48,000 shares. Common shares: no par value, authorized 178,500 shares. During year 1, the following transactions occurred in the order given: a. Sold and issued 24,000 common shares to each of the three organizers. Collected $8 cash per share from two of the organizers, and received a plot of land with a small building on it in full payment for the shares of the third organizer and issued the shares immediately. Assume that 20 percent of the non-cash payment received applies to the building. b. Sold and issued 6,800 preferred shares at $22 per share. Collected the cash and issued the shares immediately. c. Sold and issued 2,800 preferred shares at $22 and 2,800 common shares at $11 per share. Collected the cash and issued the shares immediately. d. The operating results at the end of year 11 were as follows: Revenues Expenses, including income taxes $ 370,000 220,000 Required: 1. Prepare the journal entries to record each of these transactions and to close the accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 2 3 4 5 > Record sale and issue of 72,000 common shares at $8 per share. Note: Enter debits before credits. Transaction General Journal Debit Credit a. Record entry Clear entry View general journal View transaction list X: > 1 Record sale and issue of 72,000 common shares at $8 per share. 2 Record sale and issue of 6,800 preferred shares at $22 per share. 3 Record sale and issue of 2,800 preferred shares at $22 per share and 2,800 common shares at $11 per share. Credit 4 Record closing entry to transfer revenues and expenses to income summary. 5 Record closing entry to transfer the profit to Retained earnings. Note : = journal entry has been entered Record entry Clear entry View general journal 3. Prepare the shareholders' equity section of the statement of financial position for King Corporation at the end of year 1. KING CORPORATION Shareholders' Equity As at End of Year 1 Share capital: Total shareholders' equity $ 0