Question
Mariners Ltds corporate charter allows them to issue an unlimited number of common shares and up to 500,000, $1 cumulative preferred shares. On January 1,
Mariners Ltds corporate charter allows them to issue an unlimited number of common shares and up to 500,000, $1 cumulative preferred shares. On January 1, Year 4, Mariners Ltd had the following opening equity balances:
Preferred Shares: $0
Common Shares: $4,200,000 (note: 700,000 shares issued)
Contributed Surplus: $140,000
Retained Earnings: $1,820,000
The contributed surplus arose when Mariners LTD reacquired common shares in a prior year. Throughout the year ended December 31, Year 4, Mariners Ltd. had the following share transactions:
Jan. | 9 | Issued 87,500 common shares at $9.24 per share. |
July | 3 | Issued 70,000 preferred shares at $25 per share. |
Sept. | 3 | Declared a 4% stock dividend to common shareholders of record on September 15, distributable September 28. The September 3rd common share price was $10 per share. |
15 | Noted the shareholders of record on this date. The September 15th common share price was $12 per share. | |
27 | Distributed the stock dividend declared on September 3rd to shareholders. The September 27th common share price was $11 per share. | |
Nov. | 2 | Issued 17,500 preferred shares at $25 per share. |
4 | Reacquired and retired 35,000 common shares for $11 per share. | |
Dec. | 22 | Declared an annual cash dividend of $1 per share to preferred shareholders of record on January 15, payable January 31. |
In addition, Mariners Ltd. reported net income of $896,000 for the year.
Instructions Record the above transactions up to December 31, Year 4. Write no entry if you believe no journal entry is necessary on the specified date, Record the closing entries necessary to close dividends and net income
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