Problem 1:
Lindsay Ltd was authorized to issue an unlimited number of common shares. During January 2011, its first month of operation the following selected transactions occurred:
Jan 1. 1,000 shares were issues to the organizers of the corporation. The total value of the shares was determined to be $8,000
Jan 5. 15,000s shares were sold to various shareholders for $9.00 each
Jan 15. The board of directors declared a cash dividend of 0.50 per common share to shareholders of record on January 19, payable January 31
Jan 20. 4,000 shares were issued in an exchange for land valued at $32,000. The shares were actively trading on this date at $10.75 per share
Jan 31. Closed the income Summary account, which showed a credit balance of $110,000
Jan 31. Paid the dividends declared on January 19
Required:
a) Journalize the above transactions
b) Prepare the shareholder’s equity section of the balance sheet of Lindsay Ltd at January 31,2011
c) What was the average issue price per common share?
Problem 2: The December 31, 2011 shareholders equity section of the balance sheet of Maritime Inc appears below
Maritime Inc.
Shareholders Equity
December 31, 2011
Contributed capital:
Preferred shares, $4.50 cumulative,
40,000 shares authorized and issued..................................$2,000,000
Preferred shares, $12 non-cumulative,
8,000 shares authorized and issued...................................... 800,000
Common Shares,400,000 shares authorized and issued........ 2,000,000
Total Contributed capital...................................................... 4,800,000
Retained Earnings.................................................................. 890,000
Total Shareholders Equity....................................................$5,690,000
Required:
All the shares were issued on January 1, 2009 (when the corporation began operations). No dividends had been declared during the first two years of operations(2009 and 2010). During 2011 the cash dividends declared and paid totalled $736,000.
a) Calculate the amount of Cash dividends paid during 2011 to each of the three classes of shares Preferred Shares Cumulative, Preferred Shares Non-Cumulative and common shares.
b) Assuming net income earned during 2011 was $1,500,000 determine the December 31, 2010 balance in retained earnings.
c) Prepare a statement of retained earnings for the year ended December 31,2011
Problem 3: The balance sheet for the Clarke Corporation reported the following components of shareholders equity on December 31,2011:
Common shares.unlinted shares authorized,
20,000 shares issued and outstanding......................460,000
Retained Earnings...................................................270,000
Total Shareholders equity.......................................$730,000
In 2012 Clarke Corporations had the following transactions affecting shareholders and the shareholder equity accounts:
Jan 5. The directors declared a $4.00 per share cash dividend payable Feb.28 to the Feb 5. Shareholders of record.
Feb 28. Paid the dividend declared on January 5th.
July 6. Sold 750 common shares at $48 per share,
Aug. 22 Sold 1,250 common shares at $34 per share
Sept 5. The directors declared a $4.00 oer share cash dividend payable on Oct.28 to the Oct. 5 shareholders of record
Oct. 28 Paid the dividend declared on September 5
Dec.31 Closed the $434,000 credit balance in the income summary account.
31 Closed the Cash Dividends Accounts
Required:
a) Prepare Journal Entries to record the transactions and closings for 2012
b) Prepare a statement of retained earnings for the year ended December 31,2012
c) Prepare the shareholders equity section of the corporations balance sheet as of December 31,2012