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\mathrm{.}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 Den$$s 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.

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.

Required:

$($a$)$ Prepare journal entries for each of the transactions above in $2019.$