ACME Ltd. is authorized to issue 100,000 $2 cumulative preferred shares. The company can issue unlimited common
Question:
ACME Ltd. is authorized to issue 100,000 $2 cumulative preferred shares. The company can issue unlimited common shares, and has 64,500 common shares outstanding worth $245,000 and no preferred shares issued. Currently, the opening retained earnings equals $296,000.
The following transactions occurred during 2021:
Jan. 3 | ACME Ltd. issued 4,800 common shares in exchange for land valued at $66,000. (2 marks) |
Feb. 15 | The board of directors delcared a 5% share dividend to shareholders of record on Mar. 5, to be distributed on Mar. 17. The shares trade for $5 a share. |
Mar. 17 | Issued the share dividend. |
Apr. 13 | Sold and issued 10,000 preferred shares for cash at $29 per share. |
May 16 | The board declared total cash dividends of $68,000 to shareholders of record on May 16, payable on Jun. 4. |
Jun. 4 | Paid the cash dividend. |
Aug. 22 | The board decided to split the common shares 5 to 1 effective Sep. 5. |
Sep. 5 | Share split (5 to 1) executed. |
Dec. 31 | ACME Ltd. earned a net income of $225,000 for the year. Close out the income summary account and any other temporary equity accounts. |
REQUIRED:
1) Journalize the above entries.
2) Prepare a statement of changes in equity for 2021.
3) Prepare the balance sheet presentation of the equity section as at December 31, 2021
Expert Answer:
Requirement 1 Journal Entries Date General Journal Debit Credit 2021 Jan03 Land 66000 Common Shares ... View the full answer
