The authorized capital of $100,000 consists of 750 shares of common stock having a par value of $100 per share, and 250 shares of preferred stock of the same par value.
The incorporators subscribed for at par and paid for the common stock as indicated below:
Arthur Butler, 250 shares in cash.
A. J. Lindsey, 150 shares by transferring the following assets and liabilities: cash $3,000; accounts receivable $7,000; notes payable $3,000; notes receivable $2,000; stock of raw material $9,000; accounts payable $5,000; furniture and fixtures $2,000.
Edward Harrison, 100 shares by giving bill of sale of machinery appraised at $6,000; the balance to be paid in one year.
Charles E. Wells, 50 shares by his personal note for $5,000 with interest at 6%, due in one year.
In connection with the organization of the corporation the following items were paid in cash: corporation tax $50; filing fees $20; recording fees $12; legal expenses $500.
(a) Write journal entries to record this information on the books of the corporation.
(b) Prepare a balance sheet showing the condition of the corporation at this date.
Instructions