Reference no: EM132575888

Question - Shelly Corporation is in its first year of business. It was organized by 10 local entrepreneurs on January 1, 2019, for the purpose of operating a business to sell various supplies to hotels. The charter authorized the following stock:

Common stock, no-par value, 20,000 shares

Preferred stock, 5 percent, $100 par value, 5,000 shares

The laws of the state specify that the legal capital for no-par stock is the full sale amount.

The following summarized transactions, selected from 2019, were completed on the dates indicated:

a. Jan. Sold total of 8,000 shares of common stock to the 10 entrepreneurs for cash at $50 per share.

b. Feb. Sold 2,000 shares of preferred stock at $102 per share; for cash.

c. Mar. Declared cash dividend of $1 on common stock.

d. July Purchased 100 shares of preferred stock that had been issued and sold earlier. Shelly Corporation paid the stockholder $104 per share.

e. Aug. Sold 20 shares of the preferred treasury stock at $105 per share.

Required -

1. Provide the appropriate journal entries with a short description.

2. Prepare the stockholders' equity section of the Balance Sheet for Shelly Corporation at Dec. 31, 2014. Assume retained earnings is $23,000.