Prepare the necessary journal entries for the transactions


Part I

Dr. Pepper started FutureBio Inc. (FB) on October 1, 2022.

i. On October 1, 2022, FB issued 1000 common shares to Dr. Pepper in exchange for $100,000 in cash. Also, the following events occurred in December 2022.

ii. On December 1, 2022, FB borrowed $1,200,000, 5-year loan, bearing 8% interest.

iii. On December 10, 2022, FB issued 1000 preferred Class A shares to investors for $500 each. The articles of incorporation (charter) disclosed that the Class A, non-cumulative preferred shares had a stated value of $ 200 per share.

iv. On December 28, 2022, FB declared and paid a 5% stock dividend on the common shares. The market value of the

v. common shares before the announcement of the stock dividend was $ 80 per share.

vi. On December 30, 2022, FB paid a dividend to the common shareholders of record of $50 per share.


Prepare the necessary journal entries for the above transactions as well as any adjusting entries required at the year-end date December 31, 2022. Narratives are NOT required.

Part II

In addition to common shares outstanding, Spain Corporation has the following preferred shares outstanding at the end of 2022, as indicated in the following table.

Preferred shares

Number of shares

Total Annual dividends

$30 stated value, 10%, non-cumulative


$100 stated value, 6% cumulative, convertible



i. Indicate the amount of annual dividend on each issue of the preferred shares by completing the last column of the above table.

ii. Assume that there are one year of dividends in arrears at the beginning of 2022, and Spain declared total dividends of $50,000 in 2022. What is the amount of dividends that the common shareholders will receive in 2022?

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Financial Accounting: Prepare the necessary journal entries for the transactions
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