The charter for Zycor, Inc. authorizes the company to issue 100,000 preferred shares and 500,000 common shares.

Question:

The charter for Zycor, Inc. authorizes the company to issue 100,000 preferred shares and 500,000 common shares. During its start-up phase, Zycor, Inc. completed the following transactions:

2014

Aug 6 Issued 500 common shares to the promoters who organized the corporation, receiving cash of $15,000.

12 Issued 300 preferred shares for cash of $20,000.

14 Issued 1,000 common shares in exchange for land valued at $26,000.

Requirements

1. Record the transactions in the journal.

2. Prepare the shareholders’ equity section of Zycor’s balance sheet at December 31, 2014. Assume that the company earned net income of $25,000 during this period.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...