QUESTION 1 - STOCK TRANSACTIONS

Background Information:

During its first year of operations, Millwood's Enterprises Inc. had the following transactions related to its common shares:

Jan 5 Issued 6000 common shares to Michelle Vogel for $1.75 each.

Mar 15 Issued 32,000 common shares in exchange for equipment transferred from Vogel. The equipment was valued at $65,000.

Apr 10 Issued 5,500 shares to a consulting firm for management consulting services as settlement of a $14,000 invoice.

Sep 30 Issued 3800 common shares to Renee Vogel for $3.25 each.

Instructions

a. Journalize the share transactions.

b. Calculate the average cost of the common shares of Millwood's Enterprises Inc. at December 31.

QUESTION 2 - DIVIDENDS

Background Information: Kips Corp. declared $68,000 in dividends in 2021. Share capital consists of 1,500 common shares and 3,500, $2 preferred shares. Dividends have not been paid on the preferred shares since 2017.

Instructions

Determine the dividends to be paid on preferred shares assuming:

a. the preferred shares are cumulative.

b. the preferred shares are non-cumulative.

QUESTION 3 - DIVIDENDS AND SPLITS

Background Information:

On October 31, the shareholder's equity section of Lindy Company consists of common shares, $900,000 and retained earnings, $500,000. The company is considering the following two courses of action: (1) declaring a 5% stock dividend on the 80,000 no par value shares, or (2) exercising a 2-for-1 stock split. The current market price is $16 per share.

Instructions: Complete the Chart Below: Round to two decimal places where necessary. (.5 - for each correct amount).

	Before	After Stock	After Stock
Action	Dividend	Split
Shareholders' equity
Common shares	$900,000	a) ________________	f) _______________
Retained earnings	500,000	b) ________________	g) _______________
Total shareholders' equity	$1,400,000	c)________________	h)_______________
Shares issued	80,000	d)________________	i)_______________
Book value per share	$17.50	e) ________________	j)_______________

QUESTION 1 - STOCK JOURNAL ENTRIES
Date	Accounts	Debits	Credits
5-Jan
Date	Accounts	Debits	Credits
15-Mar
Date	Accounts	Debits	Credits
10-Apr
Date	Accounts	Debits	Credits
Sept. 30

QUESTION 2 - CALCULATING DIVIDENDS
A. Calculate the dividends to be paid assuming the preferred shares are cumulative
Preferred Dividend Payout Amount = Common Stock Dividend Payout Amount =
B. Calculate the dividends to be paid assuming the preferred shares are non -cumulative
Preferred Dividend Payout Amount = Common Stock Dividend Payout Amount =
Hint: Refer to U5A3 Content section 1 for an example of this question. You need to calculate the total amount
that the preferred shareholder and common shareholders will receive in dividends in both senerios.

QUESTION 3 - STOCK DIVIDENDS AND SPLITS
	Before Action	After Stock Dividend	After Stock Split
SHAREHOLDERS EQUITY
Common shares	$900,000
Retained earnings	500,000
Total shareholders' equity	$1,400,000
Shares issued	80,000
Book value per share	$17.50			Hint: Take total shareholders equity divided by total outstanding shares
Hint: All cells highlighted in yellow should have figures
Refer to U5A3 content section 2 for an example of this question