Reference no: EM132608730

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 10Issued 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 1Issued 1,000 convertible preferred shares for $68 per share.Dec12Converted 500 preferred shares into common shares. One preferred share is convertible into 10 common shares. The fair value of the common and preferred shares is $26 and $72 respectively.

Instructions

Prepare the journal entries to record the above transactions.

Question a) Prepare the journal entries to record the above transactions.

Question 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.