Question

Falkon Corp. reported the following amounts in the shareholders’ equity section of its December 31, 2011 balance sheet:
Preferred shares, $8 dividend (10,000 shares authorized,
2,000 shares issued) ................... $200,000
Common shares (100,000 authorized, 25,000 issued) ......... 100,000
Contributed surplus .................... 155,000
Retained earnings ...................... 250,000 Accumulated other comprehensive income ........... 75,000
Total .......................... $780,000
During 2012, the company had the following transactions that affect shareholders’ equity.
1. Paid the annual 2011 $8 per share dividend on preferred shares and a $3 per share dividend on common shares. These dividends had been declared on December 31, 2011.
2. Purchased 3,700 shares of its own outstanding common shares for $35 per share and cancelled them.
3. Issued 1,000 shares of preferred shares at $105 per share (at the beginning of the year).
4. Declared a 10% stock dividend on the outstanding common shares when the shares were selling for $45 per share.
5. Issued the stock dividend.
6. Declared the annual 2012 $8 per share dividend on preferred shares and a $2 per share dividend on common shares. These dividends are payable in 201
3. The contributed surplus arose from past common share transactions. The company follows IFRS.
Instructions
(a). Prepare journal entries to record the transactions above.
(b). Prepare the December 31, 2012 shareholders’ equity section. Assume 2012 net income was $450,000 and comprehensive income was $455,000.
(c). Prepare the statement of shareholders’ equity for the year ended December 31, 2012.


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  • CreatedAugust 23, 2015
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