Reference no: EM132499516

Modern Electronics, Inc. is authorized to issue 70,000 shares of $80 par value, $6 cumulative preferred shares and an unlimited number of no-par value common shares. The following transactions (among others) occurred during the year:

Jan. 6 Issued for cash 20,000 common shares at $12 per share.

Jan. 7 Issued an additional 1,500 common shares in exchange for services in organizing the corporation. The shareholders agreed that the services were worth $9,000.

Jan. 12 Issued 3,500 preferred shares for cash of $300,000.

June 4 Acquired land as a building site in exchange for 22,000 common shares. In view of the appraised value of the land and the progress of the company, the directors agreed that the common share was to be valued, for purposes of this transaction, at $14 per share.

Nov. 15 The first annual dividend was declared on the preferred shares. It is to be paid on December 20th.

Dec. 20 Paid the cash dividend declared on November 15th.

Dec. 31 After the revenue and expense accounts were closed into the Income Summary account, that account showed net income of $146,200.

Required:

Question 1: Using the general journal provided, prepare the journal entries to record the above transactions, including closing of the income summary account on December 31.

Question 2: Prepare the shareholders' equity section for Modern Electronics, Inc. balance sheet as of December 31st on the form provided. Please use the T-accounts provided below to update the share capital accounts and support your partial balance sheet.