The balance sheet for QuStream Inc. reported the following components of equity

Question

The balance sheet for QuStream Inc. reported the following components of equity on December 31, Shares, Unlimited shares authotized, 100,000 shares issued and outstanding ained earnings $480,000 648,000 Total I The company completed these transactions during 2015: Mar. 2 The directors declared a $0.90 per share cash dividend payable on March 31 to the March 15 shareholders of record. 31 Pald the dividend declared on March 2 Issued 12,000 common shares at $7.80 per share. Issued 8,000 common shares at $5.70 per share. The directors declared a $1.50 per share cash dividend payable on January 2, 2016, to the December 10 shareholders of record. Closed the $321,600 credit balance In the Income Summary account to Retalned Earnings. Nov. 11 25 1 Dec 31 31 Closed the Cash Dividends account Part A Prepare General Journal entries to record the transactions and closings for 20XX. (6 marks) Part B Prepare a statement of changes in equity for the year ended December 31, 20Xx. (4 Marks)

Explanation / Answer

Par Value of the Stock = $ 480,000 / 100,000 Shares = $ 4.80 Per Share Journal Entries Date Account Title and explanation Debit Credit March , 02 Retained Earning $90,000       To Dividend Payable $90,000 (To Record the Dividend Payable ) Note: Dividend = 100,000 Shares X $ 0.90 = $ 90,000 Dividend Payable $90,000 March , 31       To Cash $90,000 (To Record the payment of Dividend) November , 11 Cash (12,000 X $ 7.80) $93,600        To Common Stock (12,000 X $ 4.80) $57,600        To Addittional Paid in capital - Common Stock $36,000 (To Record the issuance of Common sTock ) November , 25 Cash (8,000 X $ 5.70) $45,600        To Common Stock (12,000 X $ 4.80) $38,400        To Addittional Paid in capital - Common Stock $7,200 (To Record the issuance of Common sTock ) December , 01 Retained Earning $1,80,000       To Dividend Payable $1,80,000 (To Record the Dividend Payable ) Total Shares = 100,000 + 12,000+8,000 = 120,000 Total Dividend = 120,000 shares X $ 1.50 = $180,000 Revenue $3,21,600 December , 31      To Retained Earning $3,21,600 (Transfer the balance of revenue to retained earning) December , 31 Dividend Payable $1,80,000       To Cash $1,80,000 (To Record the payment of Dividend) STATEMENT OF CHANGES OF EQUITY Common Shares , Unlimited Shares Authorized 120,000 Shares issued and outstanding $5,76,000 Addittional Paid in Capital - Common Stock $43,200 $6,19,200

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