Canadian Tire Corporation offers a range of retail goods and services, including general merchandise, apparel, sporting goods, petroleum, and financial services. Its annual report for fiscal year 2012 included the following:
28. Share Capital
During 2012 and 2011, the Company issued and repurchased Class A Non-Voting Shares. The net excess of the issue price over the repurchase price results in contributed surplus. The net excess of the repurchase price over the issue price is allocated first to contributed surplus, with any remainder allocated to retained earnings. The following transactions occurred with respect to Class A Non-Voting Shares during 2012:

Since 1988, the Company has followed an anti- dilution policy. The Company repurchases shares to substantially offset the dilutive effects of issuing Class A Non-Voting Shares pursuant to various corporate programs and in 2012 the Company purchased an additional 299,806 Class A Non-Voting Shares.
Conditions of Class A Non-Voting Shares and Common Shares
The holders of Class A Non-Voting Shares are entitled to receive a preferential cumulative dividend at the rate of $ 0.01 per share per annum. After payment of preferential cumulative dividends at the rate of $ 0.01 per share per annum on each of the Class A Non- Voting Shares with respect to the current year and each preceding year and payment of a non-cumulative dividend on each of the Common Shares with respect to the current year at the same rate, the holders of the Class A Non-Voting Shares and the Common Shares are entitled to further dividends declared and paid in equal amounts per share without preference or distinction or priority of one share over another. . . .
Required:
1. Why do you think Canadian Tire€™s board of directors decided to repurchase the company€™s Class A non-voting shares?
2. Prepare the journal entry to record a summary of the repurchase transactions.
3. Compute the repurchase price and weighted- average issuance price of the repurchased Class A shares. Explain why the difference between the repurchase price and the issuance price is not recorded as a gain on repurchase of shares.
4. Assume that Canadian Tire had 3,423,366 common shares and 77,720,401 Class A non-voting shares when the board of directors declared that a total of $ 28.5 million will be paid as dividends to both classes of shares. Assume further that Canadian Tire did not declare dividends in 2010 and 2011. Allocate the total amount of dividends between the two classes of shares.

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(C$ in millions) Shares outstanding at beginning of the year Issued Number 78,020,208 710.3 4.6 Dividend reinvestment plan Stock option plan Employee profit sharing plan Dealer profit sharing plans 69,545 200 59,078 54,724 (483,354) 3.7 Repurchased Excess of issue price over repurchase price Shares outstanding at end of the year 1.8) $687.8 77.720,401