21.

Trainor Corporation was organized on January 1, 2014. During its first year, the corporation issued 20,000 preferred shares with a $0.30 dividend entitlement and 200,000 common shares, both at $1 per share. At December 31, the corporations year end, Trainor declared the following cash dividends:

Preferred shares Common Shares

2014 $0.25 per share $0.00

2015 as required by terms $0.05 per share

2016 as required by terms $0.15 per share

Instructions

a. Calculate the total dividends and the amount paid to each class of shares, assuming the preferred dividend is not cumulative.

b. Calculate the total dividends and the amount paid to each class of shares, assuming the preferred dividend is cumulative.

c. Journalize the declaration of the cash dividend at December 31, 2015 using the assumption of part b.

22.

Laroche Construction Company is under contract to perform extensive renovations on a large office complex. Laroche signed the contract for a total of $6 million and expected the renovations to cost $4 million. Renovations began in January, 2013 and were finished in December 2015. Actual construction costs incurred were:

2013 $ 560,000

2014 1,440,000

2015 2,000,000

Instructions

a. Calculate the revenue to be recognized in each year using the percentage-of-completion method.

b. What amount of gross profit was recognized in 2014?

23.

At December 31, 2013, Cabot Corporation reports revenue of $8,000,000 and expenses of $3,000,000. During the year, the company paid dividends of $400,000. The company had $2,500,000 in retained earnings at the beginning of 2013.

Instructions

(a) Prepare the closing entries for 2013.

(b) Calculate the balance in retained earnings that should be reported on the December 31, 2013 balance sheet.

24.

Byrne Corporation had the following accounts at January 1, 2011: common shares, no par value, unlimited number of shares authorized, 4,000 shares issued, $150,000; preferred shares, $8 cumulative, no par value, unlimited number of shares authorized, 1,000 shares issued, $50,000; retained earnings, $43,000; and accumulated other comprehensive income $4,200.

During the year, the company paid the preferred dividend and paid a $0.50 dividend to the common shareholders. The company had profit of $79,000 and other comprehensive income of $2,500 in 2011.

Instructions

Prepare the shareholders equity section of the balance sheet at December 31, 2011.

25.

Lee Holdings Ltd. was incorporated on January 2, 2011 and on that date issued 50,000 common shares for cash at $1 each. On April 30, Lee issued 1,000 preferred, $3 cumulative preferred shares, convertible to common shares at the rate of 6 common shares for one preferred share. The preferred shares were issued for $18 each. On October 15, 600 of the preferred shares were converted to common shares. On that date, the market value was $1.50 for the common shares and $17.50 for the preferred shares

Instructions

(a) Journalize the share transactions described.

(b) Calculate the number of issued shares and average cost per share of each class remaining at the end of the year.