The balance sheet for Umi Sustainable Seafood Inc. reported the following components of equity on December 31, 2019:

Common shares, unlimited shares authorized,20,800 shares issued and outstanding .................................... $376,000Retained earnings ........................................................................ 224,000Total equity ................................................................................. $600,000

In 2020, Umi had the following transactions affecting shareholders and the equity accounts:

Required

1. Prepare journal entries to record the transactions and closings for 2020.

2. Prepare a statement of changes in equity for the year ended December 31, 2020.

3. Prepare the equity section of the corporation?s balance sheet as of December 31, 2020.

Analysis Component: Explain the relationship between assets and retained earnings; use your answer in Part 3 above as part of the explanation.

Transcribed Image Text:

The directors declared a $4.00 per share cash dividend payable on Feb. 28 to the Feb. 5 shareholders of record. Jan. Feb. 28 Paid the dividend declared on January 5. Sold 1,150 common shares at $39.20 per share. July 22 Sold 1,650 common shares at $28.00 per share. Aug. The directors declared a $4.00 per share cash dividend payable on October 28 to the October 5 shareholders of record. Paid the dividend declared on September 5. 28 Oct 31 Dec. Closed the $348,000 credit balance in the Income Summary account. Closed the Cash Dividends account. 31 Sept.