On January 1, 2021, Conway Ltd. had the following shareholders equity accounts: Common shares, unlimited number of
Question:
On January 1, 2021, Conway Ltd. had the following shareholders’ equity accounts:
Common shares, unlimited number
of shares authorized, 1.5 million issued .............. $1,650,000
Retained earnings ................................................... 550,000
It was also authorized to issue an unlimited number of $6 noncumulative preferred shares. During 2021, the corporation had the following transactions and events related to its shareholders’ equity:
Jan. 2 Issued 100,000 preferred shares at $66 per share.
Mar. 31 Paid quarterly dividend to preferred shareholders.
Apr. 18 Issued 250,000 common shares at $1.30 per share.
June 30 Paid quarterly dividend to preferred shareholders.
Sept. 30 Paid quarterly dividend to preferred shareholders.
Dec. 31 Paid quarterly dividend to preferred shareholders.
Dec. 31 Profit for the year was $160,000.
Instructions
a. Journalize the transactions and the entries to close dividends and the Income Summary account.
b. Open general ledger accounts for the shareholders’ equity accounts, enter the beginning balances, and post the entries from part (a).
c. Prepare the shareholders’ equity section of the balance sheet at December 31, 2021, including any required disclosures. Assume Conway reports under ASPE.
Taking It Further
What conditions must be met to declare dividends in a corporation?
Balance SheetBalance 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... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... 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...
Step by Step Answer:
Accounting Principles Volume 2
ISBN: 978-1119502555
8th Canadian Edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak