Question $1$

$6$ Marks

CHECK FIGURE: $2.$ $$104,900$

The December $31,2017,$ equity section of ZoomZoom Inc.$\text{'}$s balance sheet appears below.

ZoomZoom Inc.

Equity Section of the Balance Sheet December $31,2017$

Contributed capital:

Preferred shares, $$3\mathrm{.}75$ cumulative.

$40\mathrm{.}000$ shares authorized and issued. $$ $$1,660,000$

Preferred shares, $$10$ non$-$cumulative.

$8\mathrm{.}000$ shares authorized and issued $q,670\mathrm{.}000$

Common shares, $400\mathrm{.}000$ shares authorized and issued. $q,$

Total contributed capital. $q,1,750,000$

Retained earnings. $q,$

Total equity $q,$

$[741,600],[$$$4,821,600]$

All the shares were issued on January $1,2015($when the corporation began operations$).$ No dividends had been declared during the first two years of operations $(2015$ and $2016).$ During $2017,$ the cash dividends declared and paid totalled $$613,300.$

Calculate the amount of cash dividends paid during $2017$ to each of the three classes of shares.

Assuming profit earned during $2017$ was $$1,250,000,$ determine the December $31,2016,$ balance in retained earnings.

Prepare a statement of changes in equity for the year ended December $31,2017.$

Mackenzie Corp. is preparing the December $31,2017,$ year$-$end financial statements. Following are selected unadjusted account balances:

Estimated warranty liability $q,$ $$6,460$

Income tax expense. $q,118,800$

$120-$days notes payable, $4\%$dots...$$80,000$

Unearned revenue................... $296,000$

Additional information:

a$)$ $$10,800$ of income tax was acciued monthly from January through to November inclusive and paid on the $15$ th day of the following month. The actual amount of tax expense for the year is determined to be $$126,040.$

b$)$ A customer is suing the company. Legal advisors believe it is probable that the company will have to pay damages, the amount of which will approximate $$140,000$ given similar cases in the industry.

c$)$ During December, Mackenzie had sales of $$710,000.5\%$ of sales typically require warranty work equal to $20\%$ of the sales amount.

d$)$ $$111,500$ of the Unearned Revenues remain unearned at December $31,2017.$

e$)$ The $120-$day note payable was dated November $15,2017.$

Required:

Prepare any required adjusting entries at December $31,2017,$ for each of the above.