JumpinJehosaPhats is a small business owned by JJ Phats asthe sole proprietor. JJphats is incorporating thebusiness.
On January 1, 2012 JumpinJehosaPhats Inc. has been authorizedto issue 1,000,000 common shares with a Par Value of $1. In theprocess of incorporating, the sole proprietor owner’s equityaccounts must be closed and the equity must now reflect a corporatestockholders’ equity account.
The books for the Sole Proprietorship indicate thefollowing:
JJ Phats deposited $35,000 to startJumpinJehosaPhats
JJ Phats contributed $50,000 of equipment to startJumpinJehosaPhats
Retained Earnings December 31, 2011 = $150,000
Prepare the Stockholder’s Equity Portion of the Balance Sheeton January 1, 2012