Solid Ltd Was Incorporated on January 4, 2021 and Is Authorized

question 150

Essay

Solid Ltd. was incorporated on January 4, 2021 and is authorized to issue an unlimited number of common shares and an unlimited number of $ 5 noncumulative preferred shares. The company entered into the following transactions during the year:
Jan 6 Issued 9,000 common shares for $ 12 per share.
Jan 10 Issued 450 common shares to the company's accountants as payment for a bill of $ 6,000 for services performed in helping the company to incorporate. The most recent value of Solid's shares was on the issuance dated January 6.
Mar 22 Issued 400 convertible preferred shares for $ 52 per share.
May 1 Issued 1,000 convertible preferred shares for $ 68 per share.
Dec 12 Converted 500 preferred shares into common shares. One preferred share is convertible into 10 common shares. The fair value of the common and preferred shares are $ 26 and $ 72 respectively.
Instructions
Prepare the journal entries to record the above transactions.
a) Prepare the journal entries to record the above transactions.
b) Prepare a partial balance sheet for Solid Company at December 31, 2021 highlighting the shareholders' equity section. Assume the company reported net income of $ 78,000 in its first year of operations.

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Definitions:

Pairwise Voting

A voting system where choices are compared to each other in pairs, with voters selecting one option over the other in each pair.

Budget Shortage

A financial situation in which an entity’s expenditures exceed its revenues over a particular period of time, leading to a deficit that must be addressed by borrowing, spending cuts, or tax increases.

Market Wage

The prevailing rate of pay for work or labor, determined by the supply and demand for labor in the job market.

Transitive Preferences

In decision-making, the condition where if an individual prefers option A to option B and option B to option C, then they also prefer option A to option C.