Annora Inc., a private company, is authorized to issue an unlimited number of common shares and 100,000

Question:

Annora Inc., a private company, is authorized to issue an unlimited number of common shares and 100,000 noncumulative $4 preferred shares. It began operations on January 1, 2017, and the following are selected transactions during 2017:
Jan. 1 Issued 300,000 common shares for $150,000 cash.
2 Issued 30,000 preferred shares for $40 cash per share.
Dec. 1 Declared a total of $225,000 in dividends, payable on January 5, to shareholders of record on December 13.
31 Determined that it had total revenues of $915,000 and operating expenses of $610,000.
Annora elected to report under ASPE. It has a 15% income tax rate and paid income tax instalments during the year of $40,000.
Instructions
(a) Record the share issue and transactions.
(b) Prepare a partial income statement starting with profit before income tax and record an adjusting entry for income tax.
(c) Prepare a statement of retained earnings and the shareholders' equity section of the balance sheet.
TAKING IT FURTHER
Why are common shareholders sometimes referred to as "residual owners"?
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...