Question
Mady Entertainment Inc. showed the following equity account balances on the December 31, 2019, balance sheet: Common shares, unlimited authorized shares, 660,000 shares issued and
Mady Entertainment Inc. showed the following equity account balances on the December 31, 2019, balance sheet:
Common shares, unlimited authorized shares, 660,000 shares issued and outstanding | $ | 3,960,000 |
Retained earnings | 2,030,000 | |
During 2020, the following selected transactions occurred:
Apr. | 1 | Repurchased and retired 172,000 common shares at $7.20 per share; this is the first retirement recorded by Mady. | |
June | 1 | Declared a 2:1 share split to shareholders of record on June 12, distributable June 30. | |
Dec. | 1 | Declared a 10% share dividend to shareholders of record on December 10, distributable December 20. The market prices of the shares on December 1, December 10, and December 20 were $4.20, $3.96, and $4.10, respectively. | |
20 | Distributed the share dividend declared December 1. | ||
31 | Closed the credit balance of $756,000 in the Income Summary account. |
Required: a. Journalize the transactions above (assuming the retirements were the first ever recorded by Mady Entertainment Inc.). The company does not use a share dividends account. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
b. Prepare the equity section on the December 31, 2020, balance sheet.
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