?-M 1M724 001501.jpg a) Record the above transactions for 2018, including any re
ID: 2430020 • Letter: #
Question
?-M 1M724 001501.jpg a) Record the above transactions for 2018, including any required entries to close dividends declared and net income (b) Open T accounts and post to the shareholders' equity accounts c) Prepare the shareholders' equity section of the statement of financial position at December 31 P11-3A Largent Corporation, a publicly traded company, is authorized to issue 200,000 $4 cumulative preferred shares Record and post equity and an unlimited number of common shares. On January 1,2018, the general ledger contained the following shareholders' transactions, prepare equity accounts statements LO 2,3,4) Preferred shares (8,000 shares issued) Common shares (70,000 shares issued) Contributed surplus Retained earnings Accumulated other comprehensive income S 440,000 1,050,000 25,000 800,000 10,000 The following equity transactions occurred in 2018 Issued 10,000 preferred shares for $600,000. Reacquired and retired 3,000 common shares at $17 per share. July 1 was valued at $165,000 and the common shares at $150,000. to the preferred shareholders. Feb. 6 Apr. 6 Issued 20,000 common shares for $570,000. May 29 Declared a semi-annual cash dividend to the preferred shareholders of record at June 12, payable Aug 22 Issued 9,000 common shares in exchange for a building. At the time of the exchange, the building Dec. 14 The board of directors decided there were insufficient funds to declare the semi-annual dividend 27 31 Net income for the year was $582,000. (a) Record the above transactions, including any entries required to close dividends and net income (b) Open T accounts and post to the shareholders' equity accounts (c) Prepare the statement of changes in equity for the year (d) Prepare the shareholders' equity section of the statement of financial position at December 31, including any required note disclosure O lype hene to search 01a-07-4Explanation / Answer
SOLUTION
a). Journal entries:
Date
Account title
Debit
Credit
6-Feb
The Cash
600,000
Preference shares
600,000
6-Apr
The Cash
570,000
Common shares
570,000
22-April
Common shares (1,050,000/70,000= $15per share*3,000Shares)
45,000
Retained earnings
6,000
The Cash
51,000
29-May
The Cash dividend
36,000
Dividend payable (18,000shares*$4*6/12)
36,000
1-Jul
Dividend payable
36,000
The Cash
36,000
22-Aug
Building
165,000
Common shares
165,000
Closing entries:
31-Dec
Income summary
582,000
Retained earnings
582,000
31-Dec
Retained earnings
36,000
The Cash dividend
36,000
b)
Open T accounts and post to the shareholders’ equity accounts:
Preference shares
440,000
Beg balance
600,000
6-Feb
1,040,000
Dec 31, ending balance
Common shares
1,050,000
Beg balance
22-Apr
45,000
570,000
6-Apr
165,000
22-Aug
1,740,000
Dec 31, ending balance
Retained earnings
22-Apr
6,000
800,000
Beg balance
31-Dec
36,000
582,000
31-Dec
1,340,000
Dec 31, ending balance
Contributed Capital - Reacquisition of preferred shares
25,000
1-Jan
c)
Prepare the statement of changes in equity for the year:
Preference shares
Common shares
Other contributed capital
Retailned earnings
Accumulated other comprehensive income
Number of shares
Capital
Number of shares
Capital
Beg balance
8,000
440,000
70,000
1,050,000
25,000
800,000
10,000
2,325,000
Issued preferred shares
10,000
600,000
600,000
Issued common shares
25,000
735,000
735,000
Reacquired shares
3,000
(45,000)
(6,000)
(51,000)
Dividends
(36,000)
(36,000)
Profit
582,000
582,000
Dec, 31 Balance
18,000
1,040,000
98,000
1,740,000
25,000
1,340,000
10,000
4,155,000
d)
Prepare the shareholders’ equity section of the statement of financial position at December 31:
Shareholder's equity:
Share capital
$4 preferred shares, 18,000 shares
1,040,000
Common shares, 92,000shares
1,740,000
Contributed capital - Reacquired
25,000
Total contributed capital
2,805,000
Retained earnings
1,340,000
Accumulated another comprehensive income
10,000
Total shareholder's equity
4,155,000
Date
Account title
Debit
Credit
6-Feb
The Cash
600,000
Preference shares
600,000
6-Apr
The Cash
570,000
Common shares
570,000
22-April
Common shares (1,050,000/70,000= $15per share*3,000Shares)
45,000
Retained earnings
6,000
The Cash
51,000
29-May
The Cash dividend
36,000
Dividend payable (18,000shares*$4*6/12)
36,000
1-Jul
Dividend payable
36,000
The Cash
36,000
22-Aug
Building
165,000
Common shares
165,000
Closing entries:
31-Dec
Income summary
582,000
Retained earnings
582,000
31-Dec
Retained earnings
36,000
The Cash dividend
36,000
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