On January 1, 2012, Conway Ltd., a private company, had the following shareholders' equity accounts:
Preferred shares, $5 noncumulative, no par value, unlimited number authorized, none issued
Common shares, no par value, unlimited number authorized, 1.5 million issued......$1,500,000
Retained earnings.................................................................................1,900,000
The following selected transactions occurred during 2012:
Jan. 2 Issued 100,000 preferred shares at $100 per share.
Feb. 8 Issued 50,000 common shares in exchange for land. On this date, the value of the land was $105,000. The common shares have not recently traded but the last time they were issued, they were sold for $2 per share.
Mar. 5 Declared the quarterly cash dividend to preferred shareholders of record on March 20, payable April 1.
Apr. 18 Issued 200,000 common shares at $2.50 per share.
June 5 Declared the quarterly cash dividend to preferred shareholders of record on June 20, payable July 1.
Sept. 5 Declared the quarterly cash dividend to preferred shareholders of record on September 20, payable October 1.
Dec. 5 Declared the quarterly cash dividend to preferred shareholders of record on December 20, payable January 1.
14 Declared a cash dividend of $0.50 per share to the common shareholders of record on December 29, payable January 10.
31 Profit for the year was $1.6 million.
Instructions
(a) Record the above transactions for 2012, including any required closing entries.
(b) Open T accounts and post to the shareholders' equity accounts.
(c) Prepare a statement of retained earnings for the year.
(d) Prepare the shareholders' equity section of the statement of financial position at December 31.
(e) Conway is a private company following ASPE. If it followed IFRS instead, how might your answers in (a) through (d) change?