Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 15

Recording and Reporting Stockholders' Equity Transactions
Ava School of Learning obtained a charter at the start of 2013 that authorized 50,000 shares of no-par common stock and 20,000 shares of preferred stock, par value $10. During 2013, the following selected transactions occurred:
a. Collected $40 cash per share from four individuals and issued 5,000 shares of common stock to each.
b. Issued 6,000 shares of common stock to an outside investor at $40 cash per share.
c. Issued 8,000 shares of preferred stock at $20 cash per share.
Required:
1. Give the journal entries indicated for each of these transactions.
2. Prepare the stockholders' equity section of the balance sheet at December 31, 2013. At the end of 2013, the accounts reflected net income of $36,000. No dividends were declared.