The equity section of the December 31, 2020, balance sheet for Cotton Tail's Egg Emporium Inc....

Transcribed Image Text:

The equity section of the December 31, 2020, balance sheet for Cotton Tail's Egg Emporium Inc. showed the following: Cotton Tail's Egg Emporium Inc. Equity Section of the Balance Sheet December 31, 2020 Contributed capital: Preferred shares; $1.25 cumulative; 100,000 shares authorized; $123,750 15,000, shares issued and outstanding... Common shares; 500,000 shares authorized; 175,000, shares issued and outstanding.. Total contributed capital............... 525,000 $648,750 Retained earnings 645,350 Total equity... $1.294,100 During 2021, the company had the following transactions affecting equity accounts: Feb 6 Issued 35,000 common shares at $3.15 per share. 22 Issued 5,000 preferred shares at $9.50 per share. May AUR 5 In addition to the declaration of the annual dividend on the preferred shares, the directors declared a $0.80 per common share cash dividend payable on September 28 to the September 5 shareholders of record. 28 Paid the dividend declared on August 5. 31 Closed the $86,700 debit balance in the Income Summary account. Required 1. Prepare the journal entries to record the transactions and closings for 2021. 2. Prepare the statement of changes in equity for the year ended December 31, 2021. Sept. Dec The equity section of the December 31, 2020, balance sheet for Cotton Tail's Egg Emporium Inc. showed the following: Cotton Tail's Egg Emporium Inc. Equity Section of the Balance Sheet December 31, 2020 Contributed capital: Preferred shares; $1.25 cumulative; 100,000 shares authorized; $123,750 15,000, shares issued and outstanding... Common shares; 500,000 shares authorized; 175,000, shares issued and outstanding.. Total contributed capital............... 525,000 $648,750 Retained earnings 645,350 Total equity... $1.294,100 During 2021, the company had the following transactions affecting equity accounts: Feb 6 Issued 35,000 common shares at $3.15 per share. 22 Issued 5,000 preferred shares at $9.50 per share. May AUR 5 In addition to the declaration of the annual dividend on the preferred shares, the directors declared a $0.80 per common share cash dividend payable on September 28 to the September 5 shareholders of record. 28 Paid the dividend declared on August 5. 31 Closed the $86,700 debit balance in the Income Summary account. Required 1. Prepare the journal entries to record the transactions and closings for 2021. 2. Prepare the statement of changes in equity for the year ended December 31, 2021. Sept. Dec

Answer rating: 100% (QA)

1 S No Date 1 2 3 4 5 5 Working Notes Cotton Tails Egg Emporium In... View the full answer