5 References Hammond Manufacturing Inc. was legally incorporated on January 2, 2020. Its articles of incorporation granted it the right to issue an unlimited number of common shares and 100,000 shares of $13.6 non-cumulative preferred shares. The following transactions are among those that occurred during the first three years of operations: 2020 Jan. 12 Issued 40,100 common shares at $4.0 each. 20 Issued 3,000 common shares to promoters who provided legal services that helped to establish the company. These services had a fair value of $28,000. 31 Issued 72,000 common shares in exchange for land, building, and equipment, which have fair market values of $352,000, $472,000, and $40,000, respectively. Mar. 4 Purchased equipment at a cost of $8,080 cash. This was thought to be a special bargain price. It was felt that at least $10,000 would normally have had to be paid to acquire this equipment. Dec. 31 During 2020, the company incurred a loss of $88,000. The Income Summary account was closed. 2021 Jan. 4 Issued 3,000 preferred shares at $64 per share. Dec. 31 The Income Summary account was closed. Profit for 2021 was $288,800. 2022 Dec. 4 The company declared a cash dividend of $0.82 per share on the common shares payable on December 18 and also declared the required dividend on the preferred shares. 18 Paid the dividends declared on December 4. 31 Profit for the year ended December 31, 2022, was $160,400. The Income Summary account was closed. Required: 1. Journalize the transactions for the years 2020, 2021, and 2022. The company does not use a cash dividends account View transaction list View journal entry worksheet No General Journal Credit Date Jan 12, 2020 Debit 160,400 1 Cash Common shares 160,400 2 Jan 20, 2020 Organization expenses Common shares 3 Jan 31, 2020 Land Building Equipment Common shares 4 Mar 04, 2020 Equipment Cash 5 Dec 31, 2020 Retained earnings Income summary 6 Jan 04, 2021 Cash Preferred shares 7 Dec 31, 2021 Income summary Retained earnings 8 Dec 04, 2022 Retained earnings Preferred dividends payable Common dividends payable 9 Dec 18, 2022 Preferred dividends payable Common dividends payable Che 5 8 Dec 04, 2022 Retained earnings Preferred dividends payable Common dividends payable 9 Dec 18, 2022 References Preferred dividends payable Common dividends payable Cash 10 Dec 31, 2022 Income summary Retained earnings 2. Prepare the statement of changes in equity for the year ended December 31, 2022. (Amounts to be deducted should be indicated by a minus sign.) HAMMOND MANUFACTURING INC. Statement of Changes in Equity For Year Ended December 31, 2022 Preferred Common Shares Shares Retained Earnings Total Equity Balance, January 1 Issuance of shares Profit Dividends Balance, December 31 $ 0 S 0 $ 0 $ 0 3. Prepare the equity section on the December 31, 2022, balance sheet. HAMMOND MANUFACTURING INC. Equity Section of the Balance Sheet December 31, 2022 Contributed capital: Preferred shares, $13.6 noncumulative, 100,000 shares authorized, 3,000 shares issued & outstanding Common shares, unlimited shares authorized, 115,100 shares issued and outstanding $ 0 Total contributed capital Retained earnings Total equity $ Analysis Component: Determine the net assets of Hammond Manufacturing Inc. for 2020, 2021, and 2022. Is the trend favourable or unfavourable? 2020 2021 2022 Net assets Trend Favourable Favourable Favourable