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Diego Suarez Corporation had the following shareholders equity accounts at December 31, 2019: Common shares, 950,000 outstanding $15,200,000 Preferred shares, $25 par value, $1 annual
Diego Suarez Corporation had the following shareholders equity accounts at December 31, 2019:
Common shares, 950,000 outstanding $15,200,000
Preferred shares, $25 par value, $1 annual cumulative dividend,
270,000 outstanding 6,750,000
Contributed surplus, issue of preferred shares 540,000
Retained earnings 5,250,000
The company had the following capital transactions during 2020:
- On February 1, repurchased and cancelled 50,000 common shares at a price of $15 per share.
- On March 1, declared all cash dividends on the preferred shares for 2019 and 2020. In 2019, the preferred shareholders were paid a dividend of $135,000.
- On March 31, paid the cash dividend on the preferred shares and distributed a 10% stock dividend on the common shares. The stock price of the common shares was $15.25 per share.
- On July 1, issued 200,000 common shares with each common share having one detachable warrant permitting the purchase of 1 common shares at a price of $16 on any date in 2020 or 2021. The shares (with warrants attached) were issued for $15.75 when the market price of the shares (without attached warrants) was $15.50.
- On September 1, repurchased and cancelled 75,000 common shares at a cost of $16.85 per share. (Hint: round average issue price to 2 decimal places)
- December 31, reported net income of 915,000.
Required:
- Prepare dated journal entries to record the transactions set out above.
- Determine the ending balances of all shareholders equity accounts.
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