Rio IncReceived Its Charter and Began Business in 2020

Essay

Rio Inc.received its charter and began business in 2020.The company was authorized to issue 28,000,$5,noncumulative preferred shares,and 500,000 common shares.Prepare journal entries to record the following transactions that occurred during 2020:
$\begin{array}{|l|l|}\hline \text { Jul-01 } & \text { Sold 2,000 preferred shares for } \$ 35 \text { per share, cash. } \\\hline \text { Aug-06 } & \text { Exchanged } 3,000 \text { common shares for equipment and inventory with a fair } \\& \text { market value of } \$ 25,000 \text { and } \$ 15,000 \text { respectively. } \\\hline\end{array}$