Question

Heuristic Solutions is authorized to issue an unlimited number of common shares and 50,000 preferred shares....

Heuristic Solutions is authorized to issue an unlimited number of common shares and 50,000 preferred shares. During its first year (2019), the business completed the following share issuance transactions:
July 19: Issued 50,000 common shares for cash of $5 per share.
Oct 3: Issued 500, $1.50 preferred shares for $50,000 cash.
Oct 11: Received inventory valued at $20,000 and equipment with fair value of $10,000 for 5000 common shares.

Journalize the transactions.
Prepare the shareholders’ equity section of Heuristic Solution’s balance sheet. The ending balance of Retained Earnings is a deficit of $95,000.

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Answer #1

Answer :-

Date General journal Debit Credit
July 19 Cash $250,000
Common stock(50,000 * $5) $250,000
( To record issue of common shares for cash)
October 03 Cash $50,000
Preferred stock $750
Paid in capital in excess of par- Preferred $49,250
( To record issue of preferred shares for cash)
October 11 Inventory $20,000
Equipment $10,000
Common stock $30,000
( To record issue of common shares for inventory and equipment)
Stockholders equity section
Common stock 280,000
Preferred stock - $1.50 per share 750
Paid in capital in excess of par - Preferred 49,250
Total paid in capital 330,000
Retained earnings, Deficit -95,000
Total stockholders equity $235,000
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