Question

Robert Corporation was organized in 2013. At December 31, 2013, Robert Corporation’s balance sheet reported the following shareholders’ equity:
Shareholders’ Equity
Share Capital:
Preferred Shares, 6%, 35,000 shares authorized, none issued .... $ 0
Common Shares, 120,000 shares authorized,
11,000 shares issued and outstanding ............ 44,000
Total Share Capital ................... 44,000
Retained Earnings (deficit) ................ (5,000)
Total Shareholders’ Equity ............... $39,000
Requirements
Answer the following questions and make journal entries as needed:
1. What does the 6% mean for the preferred shares? After Robert Corporation issues preferred shares, how much in annual cash dividends would Robert Corporation expect to pay on 1,000 shares?
2. At what price per share did Robert Corporation issue the common shares during 2013?
3. Were the first-year operations profitable? Give your reasons.
4. During 2014, the company completed the following selected transactions. Journalize each transaction. Explanations are not required.
a. Issued for cash 2,000 preferred shares at $10 per share.
b. Issued for cash 1,500 common shares at a price of $5 per share.
5. Prepare the shareholders’ equity section of the Robert Corporation balance sheet at December 31, 2014. Assume net income for the year was $65,000.


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  • CreatedJuly 08, 2015
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