ABC Corporation had the following shareholders equity balances at January 1, 2020:

Common shares, unlimited authorized, 400,000 issued $800,000

Retained earnings 120,000

Accumulated other comprehensive income 30,000

The following events occurred in 2020:

• Issued 50,000 common shares for $150,000 cash.
• Declared and paid cash dividends of $25,000.
• Reported net income of $40,000.
• Reported other comprehensive income of $10,000.
• At the end of the year, the fair market value of common shares was $5/share.
• Completed a 2:1 stock-split.

Required:

1. Prepare a statement of changes in equity using the following tabular format (i.e., input numbers into the table below):

	Common Shares	Retained Earnings	Accumulated Other Comprehensive Income	Total
January 1, 2020
December 31, 2020

2. Would your answer to part a) above change if the company paid a stock dividend rather than a cash dividend? Explain.

3. Briefly explain why the shareholders equity section is important to users of financial statements.
4. Provide your views on the following quote from the President of Medical Ltd, a struggling pharmaceutical company that focuses on developing new and innovative medications:

Investors are important. We need to please them. We need to maintain a high dividend payout ratiowhatever it takesI want to show an increasing dividend payout ratio.