Hi, I have the answer key here attached. I'm hoping someone could explain iv,vi and vii to me. Specifically, why do we credit cash for question iv but we credit common shares for vii? Also, why do we not include retained earnings into these journal entries. Finally, for vi, why do we not have cash as part of the journal entry as it should be increasing? Thanks in advance!

c) On December 31, 2004 Canadian Cheese Company had the following shareholders' equity balances: Preferred shares- $5 cumulative redeemable preferred shares, 250,000 authorized, 30,000 issued and outstanding $ 2,400,000 (1 year of dividends in arrears) Common shares- unlimited authorized, 225,000 issued $ 1,125,000 Retained earnings $ 750,000 $ 4,275,000 The following transactions took place in 2005: 3 3 On January 12, 2005, 125,000 common shares were issued at $15 each and 25,000 preferred shares at $80 per share. On March 31, $160,000 of cash dividends were declared and paid by the Board of directors. On June 30, 2005 35,000 common shares were repurchased and cancelled at price of $7 per share. On September 30, the directors declared a dividend large enough to pay each common shareholder $0.50 per share. On October 31, 2005 the Board of Directors declared a 2 for 1 stock split on the company's common shares. On December 31, 2005 the company announced net income of $575,000. On December 31, 2005 the Board of Directors announced a 10% stock dividend to all common shareholders. The common shares were trading at $8.50 per share.