ACME Ltd is authorized to issue 100,000 $2 cumulative preferred shares The company can issue unlimited common shares, and has 64,500 common shares outstanding worth $245,000 and no preferred shares issued Currently, the opening retained earnings equals $296,000 The following transactions occurred during 2021 Jan 3 ACME Ltd issued 4,800 common shares in exchange for land valued at $66,000 (2 marks) Feb 15 The board of directors delcared a 5 share dividend to shareholders of record on Mar 5, to be distributed on Mar 17 The shares trade for $5 a share Mar 17 Issued the share dividend Apr 13 Sold and issued 10,000 preferred shares for cash at $29 per share May 16 The board declared total cash dividends of $68,000 to shareholders of record on May 16, payable on Jun 4 Jun 4 Paid the cash dividend Aug 22 The board decided to split the common shares 5 to 1 effective Sep 5 Sep 5 Share split (5 to 1) executed Dec 31 ACME Ltd earned a net income of $225,000 for the year Close out the income summary account and any other temporary equity accounts REQUIRED 1) Journalize the above entries (23 marks) 2) Prepare a statement of changes in equity for 2021 (6 marks) 3) Prepare the balance sheet presentation of the equity section as at December 31, 2021 (4 marks)

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Posted on Jul 25, 2024

ACME Ltd. is authorized to issue 100,000 $2 cumulative preferred shares. The company can issue unlimited common shares, and has 64,500 common shares outstanding worth

ACME Ltd. is authorized to issue 100,000 $2 cumulative preferred shares. The company can issue unlimited common shares, and has 64,500 common shares outstanding worth $245,000 and no preferred shares issued. Currently, the opening retained earnings equals $296,000.

The following transactions occurred during 2021:

Jan. 3	ACME Ltd. issued 4,800 common shares in exchange for land valued at $66,000. (2 marks)
Feb. 15	The board of directors delcared a 5% share dividend to shareholders of record on Mar. 5, to be distributed on Mar. 17. The shares trade for $5 a share.
Mar. 17	Issued the share dividend.
Apr. 13	Sold and issued 10,000 preferred shares for cash at $29 per share.
May 16	The board declared total cash dividends of $68,000 to shareholders of record on May 16, payable on Jun. 4.
Jun. 4	Paid the cash dividend.
Aug. 22	The board decided to split the common shares 5 to 1 effective Sep. 5.
Sep. 5	Share split (5 to 1) executed.
Dec. 31	ACME Ltd. earned a net income of $225,000 for the year. Close out the income summary account and any other temporary equity accounts.

REQUIRED: 1) Journalize the above entries. (23 marks) 2) Prepare a statement of changes in equity for 2021. (6 marks) 3) Prepare the balance sheet presentation of the equity section as at December 31, 2021. (4 marks)