Response to the following problem:
At December 31, 2016, the shareholders' equity section of the balance sheet for the Apex Auto Corporation totalled $2,000,000. Following are the balances of various general ledger accounts at that date.
Preferred shares, $.40, cumulative Issued 50,000 shares $500,000
Common shares Issued 50,000 shares 750,000
Retained earnings-unrestricted 750,000
The following transactions occurred during 2017.
Mar. 20 A cash dividend of $0.20 per preferred share was declared, payable April 1 to shareholders of record on March 25.
Apr. 1 Payment of previously declared dividend on preferred shares was made.
June 15 The regular semi-annual cash dividend on common shares of $0.40 per share was declared, payable July 10 to shareholders of record on July 1.
July 10 Payment of the previously-declared dividend on common shares was made.
Aug. 1 10,000 common shares were issued for $200,000 cash.
Nov. 15 The board of directors met and restricted an additional $75,000 for the plant extension.*
Dec. 15 The regular semi-annual dividend of $0.40 per common share was declared payable December 31, 2017.
Dec. 31 A cash dividend totalling $25,000 was paid. *complete only if Appendix 2 is covered
Required:
1. What amount of cash dividends would be distributed to common shareholders on December 31, 2017?
2. Prepare journal entries for the 2017 transactions. Ignore closing entries. Descriptions are not necessary.
3. Prepare the statement of changes in equity for the year ended
December 31, 2017 assuming net income for the year amounted to $165,000.