Question: Paco Corporation is authorized to issue an unlimited number of common shares and 1,000,000 shares of preferred shares. During 2017, its first year of operation, the company had profit of $200,000. The following share transactions occurred:
Jan 1 Paid the province $5,000 for incorporation fees.
Jan 15 Issued 500,000 of $1 cumulative preferred shares at $7 per share.
Jan 30 Lawyers for the company accepted 500 common shares as payment for legal services provided in helping the company incorporate. The legal services are estimated to have a value of $5,000. The shares were actively trading at $10.50 per share.
Jul 2 Issued 110,000 common shares for land. The land had an asking price of $900,000. The shares are currently selling on a provincial exchange at $8 per share.
Instructions: a) Journalize the transactions for Paco Corporation.
b) Prepare the shareholders' equity section of the balance sheet, Paco has a December 31 yearend.