1. In 2020, Pauline and some of her friends invested money to start a company named LADIEZ Corporation. The following transactions oc- curred during 2020. Jan 1 The corporate charter authorized 77,000 shares of 3%, Cumulative preferred shares and unlimited no-par value common shares Jan 6 issued 157.000 common shares at 59 per share to Elizabeth and other investors. Jan 7 issued another 590 common shares to Elizabeth in exchange for her services in organizing the corporation. The shareholders agreed that the services were worth 59,440. Jan 12 issued 4.200 preferred shares for $336,000 Jan 14 Issued 9,000 common shares in exchange for equipment. The fair market value of the equipment could not be readily determined, but the maricat price of the common shares on this date was $13 per share Nov The first annual dividend on preferred shares declared. 15 Dec 20 Paid the dividends declared on preferred shares. Dec 31 Estimated income tax expense of $44.700 LADIEZ Corporation generated a $105,000 (after income tax) during the year. The company uses the retained earnings account to record dividends. a) Prepare the amount of journal entries to record the above transactions in 2020 for Nov 15 and Dec 20 Retained Earnings Nov 15 Answer Dividends Payable Answer Answer Dividend declared on preferred shares Dividends Payable Dec 20 Answer Cash Answer b) Prepare the statement of retained earnings for the year ended December 31, 2020. LADIEZ Corporation Calculation of Retained Earnings For the Year Ended December 31, 2020 Opening Balance Answer! Add: Net Income Answer Less: Cash Dividends - Preferred Answer Balance - December 31, 2020 Answer C) Prepare the shareholders' equity section of the balance sheet as at December 31, 2020. LADIEZ Corporation Balance Sheet (Partial December 31, 2020 Shareholders' Equity Contributed Capital Preferred Shares, 3% cumulative, 77.000 authorized 4.200 issued and outstanding Answer Common Shares, unlimited authorized, 166,590 issued and outstanding Answer Total Contributed Capital Antwed Retained Earnings Answed Total Shareholders' Equity Answer 2. At the end of Pataya Inc.'s third fiscal quarter in 2020, the shareholders' equity section of the balance sheet was as follows Shareholders' Equity Common Shares, unlimited authorized, 73,000 issued and outstanding $890,000 Retained Earnings $514,000 Total Shareholders' Equity $1,404,000 In the fourth quarter of 2020, the following entries related to its equity accounts were recorded. Date Oct 2 Account Title and Explanation Retained Earnings Dividends Payable Debit Credit 109,000 109,000 Oct 25 Dividends Payable Cash 109,000 109,000 Oct 30 Retained Earnings 121,000 Common Stock Dividends Distributable 121,000 Common Stock Dividends Distributable 121,000 Common Shares 121,000 Nov 5 Complete the following table showing the equity balances at each indicated date. Oct 2 Oct 25 Oct 30 Common Shares Answer! Answer Nov 5 Answer! Answer! Common Stock Dividends Distributable Answer! Answer Answer! Answer! Retained Earnings Answer! Answer! Answer! Answer! Total Shareholders' Equity
