Beamsley was organized in 2017 to operate a financial consulting business. The charter authorized 12,000 common shares, no par value. During the first year, the following selected transactions were completed:
a. Issued 6,000 shares of common shares for cash at $20 per share.
b. Issued 2,000 shares of common shares for cash at $23 per share.
Required:
1. Show the effects of each transaction on the accounting equation.
2. Give the journal entry required for each of these transactions.
3. Prepare the shareholders’ equity section as it should be reported on the 2017 year-end balance sheet. At year-end, the accounts reflected a profit of $100.
4. Beamsley has $30,000 in the company’s bank account. Should the company declare cash dividends at this time? Explain.
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