Subsequent to the legalization of weed in Canada, Cannabis Den was incorporated in Ontario in 2019 with 5 initial shareholders, who were wealthy cannabis enthusiasts in London, Ontario. The company had an unlimited number of common shares authorized, and 200,000 preferred shares with a $1.70 dividend rate authorized. The following transactions took place during the first year of operations (2019) with respect to these classes of shares (Cannabis Den followed ASPE):

Feb. 28 - 40,000 common shares were sold by subscription to 10 employees, who each purchased 4,000 shares for $15 per share. 40% of the amount was paid in cash immediately. The balance was to be paid by January 31, 2020, at which time the shares would be issued.

March 1 - 65,000 common shares were sold by subscription to 5 London residents, who each purchased 13,000 shares for $18 per share. 50% of the amount was paid in cash immediately, with the balance to be paid by December 31, 2019. Shares were to be issued when the full payment was received.

May 13 - 30,000 common shares were directly sold to a private equity fund for $20 per share, through an underwriter. The underwriter charged Cannabis Den a 3% commission on the sale.

Nov. 23 - Cannabis Den sold a bundle of shares, including 4000 common shares and 3,000 preferred to a wealthy family, for a total of $155,000. The fair value of the preferred shares was difficult to determine, but the transaction price on May 13 was used to estimate the value of the common share portion of the bundled sale.

Dec. 31 - of the 5 London area residents that subscribed for common shares on March 1, 3 paid the balance of the purchase price, and 2 subscribers defaulted. Cannabis Dens policy on share subscription defaults is to reduce the number of shares issued with the number of shares issued reflecting payments already received prior to defaults. 4 Dec. 31 - Cannabis Den received a bill of $18,800 from a local accounting firm for their work on the issuance of common shares. As well, Cannabis paid $11,500 to a local law firm for their work on the issuance of common shares.

1) Prepare journal entries for the above transactions in 2019

2) Prepare the shareholders' equity section of the statement of financial position as of December 31, 2019