Eddie Edwards Limited, a public company, was formed on January 2, 2014, with the following authorized capital structure:
Preferred shares: No par value, $ 1.00 per share quarterly cumulative dividend, callable at 103, 100,000 shares
Common shares: Unlimited number of shares
The following selected transactions occurred during the first six months of operations:
January 2 Issued 100,000 common shares in exchange for land and building with a combined appraised value of $ 2,200,000. Sixty percent of the acquisition cost is attributable to the building.
January 3 Issued 50,000 preferred shares for $ 1,250,000 cash.
April 1 Declared the quarterly cash dividend on the preferred shares, payable on April 25.
April 10 Declared and distributed a 5 percent common stock dividend on all outstanding common shares as of March 31. The market price of the common shares on March 31 was $ 24 per share.
April 25 Paid the preferred dividend that was declared on April 1.
1. Prepare journal entries to record the above transactions.
2. Prepare the shareholders’ equity section of the statement of financial position for Eddie Edwards Limited as at June 30, 2014. Assume that the company recorded net earnings of $ 500,000 for its first six months.