Preparing the shareholder's equity section

Eddie Edwards Limited, a public company, was formed on Jan 2, 2017, with the following authorized capital structure:

Preferred shares: No par value, $1.00 per share quarterly cumulative dividend, callable at 20

, 100,000 shares

common share: unlimited number of shares

The following selected transactions occurred during the first six months of operations:

Jan 2 Sold and issued 100,000 common shares in exchange for land and building with a combined appraised value of $2,200,000. Sixty percent of the acquisition cost is attributable to the building.

Jan 3 Sold and issued 50,000 preferred shares for $1,250,000 cash.

April 1 Declared the quarterly cash dividend on the preferred shares, payable on April 25.

April 10 Declared and distributed a 5 percent common stock dividend on all outstanding common shares as of Mar 31. The market price of the common shares on Mar 31 was $24 per share.

April 25 Paid the preferred dividend that was declared on April 1.

Required:

1. Prepare journal entries to record the above transactions
2. Prepare the shareholders' equity section of the statement of financial position for Eddie Edwards Limited as at Jun 30, 2017. Assume that the company recorded net earnings of $500,000 for its first six months.

Please proof read my answers and indicate the problem and explain the solution.

Jan 2 Land 880,000

Building ($2,200,000*60%) 1,320,000

Common Shares 2,200,000

Sold and issued 100,000 common shares for land and building

Jan 3 Cash 1,250,000

Preferred shares 1,250,000

Sold and issued 50,000 preferred shares

Apr 1 Dividends declared - preferred 50,000

Dividends payable 50,000

(50,000 * $1.00)

Apr 10 Dividend declared-Common (100,000*0.05*$24) 120,000

Stock dividend to be issued 120,000

Apr 25 Dividends payable 50,000

Cash 50,000

Eddie Edwards Limited

Shareholder's Equity

June 30, 2017

Share Capital:

Preferred shares: No par value, $1.00 per share quarterly cumulative dividend, callable at 103,

100,000 shares authorized, 50,000 shares outstanding $1,250,000

Common shares: Unlimited number of shares , 100,000 shares outstanding 2,200,000

Retained earnings 500,000

Total shareholder's equity $3,950,000