The parteners who own Cohen Canoes Co. wished to provide the unlimited personal liability of the partenership form of business, so they incorporated as Cohen Canoes Inc. The charter from yhe state of Utah authorizes the corporation to issue 9,000 shares of $2 no-par preferred stock and 100,000 shares of $5 par common stock. In its first month, Cohen Canoes completed the following transactions:
May 6 Issued 900 shares of common stock to the promoter for assistance with issuance of the common stock. The promotional fee was $22,500. Debit Organization Expense.
9 Issued 10,000 shares of common stock to Ben Cohen and 12,000 to Bill Cohen in return for cash equal to the stock's market value of $25 per share. The Cohens were partners in Cohen Canoes Co.
10 Issued 800 shares of preferred stock to acquire a patent of a market value of $20,000
26 Issued 1,000 shares of common stock for $25 cash per share.
Instructions:
1. Record transactions in the journal.
2. Prepare the stockholders equity section of Cohen Canoes Inc., balance sheet at May 31. The ending balance of retained earnings is $55,000.