ABC Inc. began a very lucrative consulting operation on October 1, 2011. It is authorized to issue 100,000 shares of $0.50 cumulative preferred shares and 500,000 common shares.
Oct. 1 Issued for cash, 1000 shares of the preferred shares at $4.00 each
Oct. 10 Issued for cash, 50,000 shares of the common stock at $3.00 per share.
Oct. 15 ABC Inc. purchased land for $155,000, paying cash of $55,000 and borrowing the balance from the bank (to be repaid in two years).
Oct. 20 15,000 preferred shares were issued today for total cash preceeds of $70,500.
Oct. 24 In addition to the delcaration of the annual dividend on the preferred shares, dividends of $22,400 were declared on the common shares today, payable November 15, 2011.
Oct. 31 Revenues of $750,000 were earned during the month; all cash. Expenses, all cash, totalling $250,000 were incurred in October. Close the Income SUmmary and dividend accounts
1. Prepare journal entries for each of the transactions listed.
2. Based on the transactions in Part A, prepare the balance sheet as at October 31, 2011.