The shareholders' equity accounts of Tmao, Inc. at December 31, 2013, are as follows: Preferred shares, $3

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The shareholders' equity accounts of Tmao, Inc. at December 31, 2013, are as follows:
Preferred shares, $3 noncumulative, unlimited number authorized, 4,000 issued.........$400,000
Common shares, unlimited number authorized, 160,000 issued...............................800,000
Retained earnings....................................................................................450,000
Accumulated other comprehensive loss..........................................................(50,000)
Tmao has a 35% income tax rate. During the following fiscal year, ended December 31, 2014, the company had the following transactions and events:
Feb. 1 Discovered a $70,000 understatement of 2013 cost of goods sold.
July 12 Announced a 2-for-1 preferred stock split. The market price of the preferred shares at the date of announcement was $150.
Oct. 1 Adopted a new accounting policy that resulted in a cumulative decrease to prior years' profit of $30,000 before income tax.
Dec. 1 Declared a 10% stock dividend to common shareholders of record at December 20, distributable on January 12. The fair value of the common shares was $12 per share.
18 Declared the annual cash dividend ($1.50 post-split) to the preferred shareholders of record on January 10, 2015, payable on January 31, 2015.
31 Determined that for 2014, profit before income tax was $350,000 and other comprehensive income, net of income tax expense of $35,000, was $65,000.
Instructions
Prepare a statement of changes in shareholders' equity for the year ended December 31, 2014.
Taking It Further
How does comprehensive income impact the shareholders' equity in the balance sheet? Is this the same for companies following ASPE?
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Accounting Principles Part 3

ISBN: 978-1118306802

6th Canadian edition Volume 1

Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Kinnear, Joan E. Barlow

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