On January 1, 2017, Conway Ltd. had the following shareholders\' equity accounts
ID: 2437186 • Letter: O
Question
On January 1, 2017, 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 2017, the corporation had the following transactions and events related to its shareholders' equity:
Jan 2 Issued 100,000 preferred shares at $66 per share
March 31 Paid quarterly dividend to preferred shareholders
April 18 Issued 250,000 common shares at $1.30 each
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
a) Journalize the transactions and the entries to close dividends and the Income Summary account
b) Open general ledger accounts for the shareholder's equity accounts, enter the beginning balances and post transactions in part a)
c) Prepare the shareholder's equity section of the Balance Sheet at Dec 31, 2017, including any required disclosures. Assume Conway is under ASPE
Explanation / Answer
02.01.2017 bank account dr 6600000 To prefernce share capital a/c 6600000 31.03.2017 dividend ac/c dr 1.5 To Bank Account a/c 1.5 18.04.2017 bank account a/c dr 325000 To Share capital a/c 325000 (250000*1.3) 30.06.2017 dividend ac/c dr 1.5 To Bank Account a/c 1.5 30.09.2017 dividend ac/c dr 1.5 To Bank Account a/c 1.5 31.12.2017 dividend a/c dr 1.5 To Bank Account a/c 1.5 31.12.2017 Retained Earnings a/c dr 160000 To Profit and loss a/c 160000 share capital equity account account date debit amount date credit amount 02.01.2017 bank 6600000 01.01.2017 op balance 1650000 18.04.2017 bank 325000 31.12.2017 closing balance 5275000 6925000 6925000 conway ltd Balance sheet as on 31 january 2017 liabilities amount $ share capital Authorised Capital Issued and paid up Capital 6925000 retained earnings 550000 add:profit for the year 160000 710000