Part A

Canada Corp. is authorized to issue an unlimited number of no par common shares.

Prepare the journal entries for the following transactions: (12 marks)

1. Sold 600,000 shares for $ 10 cash each, which was the fair market value of the shares.

2. Issued 80,000 shares and paid $ 140,000 cash in total payment for a piece of land. The market value of the shares had not changed.

3. Received subscriptions for 40,000 shares at $ 18 per share; received 60% of the subscription price in cash.

4. Received the balance of the subscriptions receivable.

Part B

You best friend, Yellow, is about to invest in Amazon, he is not sure if he will have rights as a shareholder. However, as a learned friend, you do know that he has rights as a shareholder in Amazon. Please list three rights that Yellow will have as a result of owning stocks in Amazon. (3 Marks)

Part C

On December 31, 2020, Apple Inc. decided to do a stock split instead of issuing a cash dividend to its shareholders. Some shareholders are upset because they were looking forward to their usual cash dividend at year-end. Your co-wroker, Mark, is a shareholder is a shareholder in Apple, Inc. and he has asked you to adsie him of the benefits, if any, to him due to the stock split.

Explain to Mark what a stock split is, with example/s, and advise him how this may be beneficial to him. (3 Marks)