On January 1, 2018, Conway Ltd., a private company, had the following shareholders' equity accounts:
Preferred shares, $5 noncumulative, unlimited number authorized, none issued
Common shares, unlimited number authorized, 3 million issued..............................$3,000,000
Retained earnings.........................................................................................................3,800,000
The following selected transactions occurred during 2018:
Jan. 2 Issued 200,000 preferred shares at $25 per share.
Feb. 8 Issued 100,000 common shares in exchange for land. On this date, the current value of the land was $210,000. The common shares have not recently traded, but the last time they traded, they sold for $2.50 per share.
Mar. 5 Declared the quarterly cash dividend to preferred shareholders of record on March 20, payable April 2.
Apr. 18 Issued 400,000 common shares at $3 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.
Oct. 4 Issued 40,000 preferred shares at $25 per share.
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 31, payable January 10.
31 Net income for the year was $1 million.
Instructions
(a) Record the above transactions for 2018, including any entries required to close dividends declared and net income to Retained Earnings.
(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 parts P11.4A(a) through P11.4A(d) change?