Manitoba Deck System Corporation (MDSC) is a public company whose shares are actively traded on the Toronto Stock Exchange. The following information relates to MDSC:
Jan. 1, 2014 The company is granted a charter that authorizes the issuance of 500,000 no par value common shares, and 250,000 no par value preferred shares that entitle the holder to a $4 per share annual dividend.
Jan. 10, 2014 Issues 15,000 common shares to the founders of the corporation for land that has a fair value of $450,000.
Mar. 10, 2014 Issues 4,000 preferred shares for cash for $100 per share.
Apr. 15, 2014 The company issues 110 common shares to a car dealer in exchange for a used vehicle. The asking price for the car is $6,400. At the time of the exchange, the common shares are selling at $55 per share.
Aug. 20, 2014 MDSC decides to issue shares on a subscription basis to select individuals, giving each person the right to purchase 250 common shares at a price of $60 per share. Forty individuals accept the company's offer and agree to pay 10% down and the remainder in three equal instalments.
Oct. 11, 2014 MDSC issues 3,000 common shares and 600 preferred shares for a lump sum of $230,000 cash. At the time of sale, both the common and preferred shares are actively traded. The common shares are trading at $58 each; the preferred shares at $105 each.
Dec. 31, 2014 MDSC declares cash dividends totalling $26,000, payable on January 31, 2015, to holders of record on January 15, 2015.
Instructions
(a) Prepare the general journal entries to record the transactions.
(b) Provide support for the exchange value of the April 15, 2014 transaction, referring to the conceptual framework.