A Corporation Received Its Charter and Began Business This Year

question 132

Essay

A corporation received its charter and began business this year. The company is authorized to issue 50,000 shares of $100 par, 10%, noncumulative, nonparticipating preferred stock and 500,000 shares of no-par common stock. The following selected transactions occurred during this year:
$\begin{array}{|l|l|}\hline \text { Apr. } 5 & \text { Issued } 250 \text { shares of preferred stock for } \$ 104 \text { cash per share } \\\hline \text { June 15 } & \begin{array}{l}\text { Exchanged } 750 \text { shares of common stock for } \$ 15,000 \text { in legal services incurred in } \\\text { the organization of the company. }\end{array} \\\hline\end{array}$ Prepare journal entries to record these transactions.

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Definitions:

Statement of Cash Flows

A financial report that provides a summary of a company's cash inflows and outflows over a certain period, showing how it raises and spends cash.

Statement of Cash Flows

A financial report detailing modifications in balance sheet accounts and income's impact on cash and equivalents, segmented into operating, investing, and financing activities.

Loss

A decrease in net income that occurs when expenses exceed revenues, investments diminish in value, or assets are lost or damaged.

Investing Activities

Transactions involving the acquisition and disposal of long-term assets and investments not included in cash equivalents.