Smart Tech Inc.s shareholders equity on December 31, 2013, was as follows: Shareholders Equity Share Capital: Preferred

Question:

Smart Tech Inc.’s shareholders’ equity on December 31, 2013, was as follows:

Shareholders’ Equity

Share Capital:

Preferred Shares, $1 accumulated deferred dividends,

150,000 shares authorized, 50,000 issued and outstanding....$1,000,000

Common Shares, unlimited number of shares authorized,

100,000 shares issued and outstanding........$2,000,000

Retained Earnings.................. 450,000

Total Shareholders’ Equity..............$3,450,000

During 2014, the following transactions occurred.

Jan 2 10,000 preferred shares were issued at $22.00 per share.

Feb 1 12,000 common shares were issued in exchange for a building with a fair value of $300,000.

Nov 25 Declared preferred dividends to be paid on December 23.

Dec 27 Declared 5% common stock dividend, when the market price was $25, to be distributed on January 30, 2015 Dec 31 Net income for the year was $520,000.

Requirements

1. Journalize the above transactions.

2. Prepare the shareholders’ equity section of the Smart Tech Inc. balance sheet as of December 31, 2014.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...