Problem - The partners who own a Cohen Canoes Co. wished to avoid the unlimited personal liability of the partnership form of business, so they incorporated as Cohen Canoes Inc. The charter from the state of Utah authorizes the corporation to issue 9,000 shares of $2 no-par prefered stock and a 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 promotor for assistance of 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 shares 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 with a market value of $20,000.

26 Issued 1,000 shares of common stock for $25 cash per share.

Directions:

1. Record the transactions in the journal.

2. Prepare the stock holders equity section of the Cohen Canoes Incorporated, balance sheet at May 31. The ending balance of retained earnings is $55,000.