7 of 7 View Policies < Show Attempt History Current Attempt in Progress 0.39/1 E III Perfect Ponds Inc. (PPI) is a backyard pond design and installation company. PPI was incorporated during 2020, with an unlimited number of common shares, and 51,500 preferred shares with a $3 dividend rate authorized. PPI follows ASPE. The following transactions took place during the first year of operations with respect to these shares: Jan. 1 Jan. 15 Feb. 20 Mar. 3 May 10 Sept. 23 Nov. 28 Dec. 31 Dec. 31 The articles of incorporation were filed and state that an unlimited number of common shares and 51,500 preferred shares are authorized. 30,900 common shares were sold by subscription to 3 individuals, who each purchased 10,300 shares for $52 per share. The terms require 10% of the balance to be paid in cash immediately. The balance was to be paid by December 31, 2021, at which time the shares will be issued. 72,100 common shares were sold by subscription to 7 individuals, who each purchased 10,300 shares for $52 per share. The terms require that 10% of the balance be paid in cash immediately, with the balance to be paid by December 31, 2020. Shares are to be issued once the full payment is received. 51,500 common shares were sold by an underwriter for $54 per share. The underwriter charged PPI a 5% commission on the sale. PPI paid $2,060 to a printing company for costs involved in printing common share certificates. As well, an invoice for legal fees related to the issue of common shares was received for $15,450. PPI issued a combination of 2,060 common and 1,030 preferred shares to a new shareholder for a total price of $206,000. PPI was unable to estimate a fair value of the preferred shares, and the most recent sale of common shares was used to estimate the value of the common share portion of the transaction. PPI wanted to recognize the efforts of a key employee and offered him the opportunity to purchase 515 common shares for $54, to be paid by December 31, 2021. The employee accepted the offer and signed a note payable to PPI in the exchange. No interest was to be charged on the outstanding balance; however, the shares were issued immediately. Of the 7 subscriptions issued on February 20, five subscriptions were paid in full and two subscribers defaulted. According to the subscription contract, the defaulting subscribers would not be issued shares for any amount that had been paid and no cash would be refunded. PPI declared a dividend of $206,000 for 2020. Net income for the year was $824,000. Your answer is partially correct. Prepare the journal entries to record the transactions for the year. (Credit account titles are automatically indented when the amou is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Jan. 1 No Entry No Entry Jan. 15 Cash Share Subscriptions Receivable Common Shares Subscribed Feb. 20 Cash Share Subscriptions Receivable Common Shares Subscribed Mar. 3 Cash Common Shares May 10 Common Shares Cash Sept. 23 Cash Nov. 28 Common Shares Preferred Shares Share Subscriptions Receivable Common Shares Dec. 31 Cash Share Subscrtetlone Recebusble Debit 160680 374920 139050 17510 Credit 160680 374920 535600 139050 17510 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Common Shares Cash Share Subscriptions Receivable (To record collection of subscriptions receivable) Common Shares Share Subscriptions Receivable (To record issuance of shares for fully paid subscriptions) Common Shares Share Subscriptions Receivable Notes Receivable (To record forfeit of unpaid subscriptions receivable) Dividends Dividends Payable (To record dividends declared to preferred shareholders) Dividends Dividends Payable (To record dividends declared to common shareholders) Your answer is partially correct. Prepare the shareholders' equity section of the SFP as of December 31, 2020. Perfect Ponds Inc. Shareholders' Equity Share Capital Preferred Shares Common Shares Common Shares Subscribed December 31, 2020 Less : Share Subscriptions Receivable Less Note receivable from employee for Issued shares Total Share Capital Contributed Surplus Total Paid-In Capital Retained Earnings Total Shareholders' Equity fA $