Question

Jager Metal Corp.
Equity Section of the Balance Sheet
November 30, 2014
Contributed capital:
Preferred shares, $13.20 cumulative,
2,000 shares authorized and issued........................................................... $480,000
Common shares, unlimited shares authorized; 60,000 shares issued ............. 1,440,000
Total contributed capital ............................................................................... $1,920,000
Retained earnings............................................................................................. 1,008,000
Total equity ...................................................................................................... $2,928,000

Required Refer to the equity section above. Assume that the preferred shares are convertible into common at a rate of eight common shares for each share of preferred. If 1,000 shares of the preferred are converted into common shares on December 1, 2014, prepare the entry and describe how this affects the equity section of the balance sheet (immediately after the conversion).
Analysis Component: If you are a common shareholder in this company, and it plans to pay total cash dividends of $584,400, does it make a difference to you whether the conversion takes place before the dividend declaration? Why?



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  • CreatedJanuary 08, 2015
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