Reference no: EM133004214

Question - Khan Corporation was organized on January 1, 2019. For the year 2020, it is authorized to issue an unlimited number of $3-noncumulative, no par value preferred shares and an unlimited number of no par value common shares. The following transactions were completed during the year:

Jan. 10 Issued 100,000 common shares at $2 per share

Mar. 1 Issued 10,000 preferred shares at $42 per share

Apr 1 Issued 25,000 common shares for land. The market value of the common shares was $2.50 per share on this day

May 1 Issued 75,000 common shares at $3 per share

July 24 Issued 16,800 common shares for $60,000 cash and used equipment. The common shares issued had a market value of $4 per share at this date. (Tip: you have to calculate the value of the equipment account)

Nov 1 Issued 2,000 preferred shares at $42 stated value for $48 per share

Dec. 1 Declared a payment of $36,000 of dividends to the preferred stock shareholders and $40,000 to the common stock shareholders

Dec. 10 Preferred and common stock shareholders were recorded

Dec. 15 The dividends were paid

Required -

1. Journalize the above transactions.

2. Prepare the Retained Earnings Statement. The reported net income for the year is $650,000 and the carried retained earnings from the year before are $40,000.

3. Prepare the shareholders' equity section of the balance sheet on December 31.