Question

2019 Dec. 4 Issued 5,000 common shares to the consultants who formed the corporation, receiving cash of $140,000. 13 Issued 500 preferred shares for cash of $55,000. 14 Issued 4,000 common shares in exchange for land valued at $120,000. 2020 Nov. 30 Earned a profit for the fiscal year and closed the $120,000 net income into Retained Earnings.

The articles of incorporation for Plum Corp. authorize the company to issue 100,000 $5 preferred shares and 500,000 common shares. During its first fiscal year of operations, Plum Corp. completed the following selected transactions:

Required

1. Record the transactions in the general journal.

2. Prepare the shareholders’ equity section of the Plum Corp. balance sheet at November 30, 2020.

hint 2 Issuing shares and preparing the shareholders’ equity section of the balance sheet

2. Total shareholders’ equity, $435,000

Answer 1

Dec. 4: Issued 5,000 common shares to the consultants who formed the corporation, receiving cash of $140,000

Date	Accounts	Debit	Credit
Dec. 4	Cash	$140,000
	Common Shares		$140,000

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.

Dec. 13: Issued 500 preferred shares for cash of $55,000

Date	Accounts	Debit	Credit
Dec. 13	Cash	$55,000
	Preferred Shares		$55,000

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.

Dec. 14: Issued 4,000 common shares in exchange for land valued at $120,000

Date	Accounts	Debit	Credit
Dec. 14	Land	$120,000
	Common Shares		$120,000

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.

Nov. 30: Earned a profit for the fiscal year and closed the $120,000 net income into Retained Earnings.

Date	Accounts	Debit	Credit
Nov. 30	Income summary	$120,000
	Retained earnings		$120,000

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.

Plum Corp.
Shareholders' Equity
November 30, 2020
Contributed capital
Preferred shares, $5, 100,000 shares authorized
500 shares issued	$55,000
Common shares, 500,000 shares authorized
9,000 shares issued                    [5,000 shares issued on Dec. 4 + 4,000 shares issued on Dec. 14]	$260,000 [$140,000 + $120,000]
Total contributed capital              [$55,000 + $260,000]	$315,000
Retained Earnings	$120,000
Total Shareholders' Equity          [$315,000 + $120,000]	$435,000