Veronica's Bears Ltd. manufactures teddy bears. The shareholders' equity account balances at August 1, 2015, are shown below:
$3.60 cumulative preferred shares (750,000 authorized,
75,000 issued and outstanding) . . . . . . . . . . . . . . . . . . . . . . . . . . $2,100,000
Common shares (1,000,000 authorized,
460,000 issued and outstanding) . . . . . . . . . . . . . . . . . . . . . . . . . 6,440,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,354,000
Accumulated other comprehensive income . . . . . . . . . . . . . . . . . . 22,369
The following are selected transactions during the year:
Aug. 21. Paid the semiannual dividends of $160,000 declared and recorded properly in June. No new preferred or common shares were issued during June, July, or August. Veronica's Bears uses a cash dividends account.
Sep. 5. Issued 25,000 preferred shares for $29 per share. Dec. 15. Declared semiannual dividends of $160,000 to be paid February 20, 2016, to shareholders of record on January 28.
Feb. 20. Paid the cash dividends.
Mar. 4. Issued 75,000 common shares for $12 per share.
Jun. 5. Declared semiannual dividends of $240,000 to be paid August 16, to shareholders of record on July 24.
Jun. 15. 10,000 common shares were traded in the marketplace at $16 per share.
Jul. 31. Prepared the year-end closing entries with net income of $589,235 and a gain in other comprehensive income of $6,258. Veronica's Bears uses the income summary account when preparing the closing entries.
Instructions
1. Journalize the transactions.
2. Prepare a statement of changes in equity.
3. Prepare the shareholders' equity section of the balance sheet as at July 31, 2016.