Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On January 1, 2021, Blossom Ltd. had the following shareholders' equity accounts: Splish Brothers Inc. has recorded all necessary adjusting entries, except for income tax

On January 1, 2021, Blossom Ltd. had the following shareholders' equity accounts:

Splish Brothers Inc. has recorded all necessary adjusting entries, except for income tax expense, at its fiscal year end, July 31, 2021. The following information has been taken from the adjusted trial balance:
Accounts payable $23,000 Interest expense $4,500
Cash dividendscommon 60,500 Notes payable 108,000
Common shares 182,000 Retained earnings (Aug. 1, 2020) 362,200
Cost of goods sold 308,500 Salaries expense 129,000
Dividends payable 14,600 Sales 657,000
Income tax expense 28,500 Supplies expense 10,500
Income tax payable 3,200 Unearned revenue 10,500
All accounts have normal balances and total assets equal $819,000. Splish Brothers has a 20% income tax rate.

The company was also authorized to issue an unlimited number of $4 noncumulative preferred shares. As at January 1, 2021, none had been issued. During 2021, the corporation had the following transactions and events related to its shareholders' equity:

Jan. 2 Issued 95,000 preferred shares for $44 per share.
Apr. 1 Paid quarterly dividend to preferred shareholders.
July 1 Paid quarterly dividend to preferred shareholders.
Aug. 12 Issued 95,000 common shares for $1.50 per share.
Oct. 1 Paid quarterly dividend to preferred shareholders.
Dec. 31 Paid quarterly dividend to preferred shareholders and a $0.25 per share dividend to the common shareholders.
Dec. 31 Loss for the year was $95,000.

(a)

Journalize the transactions and the entries to close dividends and the Income Summary account. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)

Date

Account Titles and Explanation

Debit

Credit

Jan. 2Apr. 1July 1Aug. 12Oct. 1Dec. 31

(To record issuance of shares.)

Jan. 2Apr. 1July 1Aug. 12Oct. 1Dec. 31

Jan. 2Apr. 1July 1Aug. 12Oct. 1Dec. 31

Jan. 2Apr. 1July 1Aug. 12Oct. 1Dec. 31

(To record issuance of shares.)

Jan. 2Apr. 1July 1Aug. 12Oct. 1Dec. 31

Dec. 31

(To record dividends paid)

Jan. 2Apr. 1July 1Aug. 12Oct. 1Dec. 31

(To close Income Summary.)

Jan. 2Apr. 1July 1Aug. 12Oct. 1Dec. 31

(To close dividends.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Aat Management Accounting Budgeting

Authors: BPP Learning Media

1st Edition

1509718400, 978-1509718405

More Books

Students also viewed these Accounting questions

Question

a. Describe the encounter. What made it intercultural?

Answered: 1 week ago