Question 1 Burlington Clothes was incorporated on October 1, 2018 The articles of incorporation indicated the company was authorized to issue 600,000 shares of no par value common shares and 200,000, $2 preferred shares that are cumulative and participating in distributions in excess of 5 of a dividend rate on the common shares The companys year end is September 30 The following information relates to the companys shareholders equity account 80,000 common shares issued for cash on October 1, 2018, at $60 per share 20,000 $2 preferred shares were issued on October 1, 2018 at $80 per share 10,000 common shares exchanged on Dec 15, 2018, for land in the downtown core The land had originally cost the seller $300,000 and had an estimated fair value of $550,000 on Dec 15, 2018 when Burlingtons share were selling for $58 10,000 common shares issued on June 1, 2019 the shares had been subscribed for $55 per share on October 31, 2018 October 1, 2020 subscriptions were received for 8,000 common shares at $60 per share The first installment of $200,000 was received on this date and the final installment was paid on September 30, 2021 November 1, 2020 the company purchased 4,000 of its common shares at $58 per share and restored these shares to the status of authorized but unissued December 1, 2020 the company declared a 5 stock dividend for shareholders of record on January 1, 2021 The company was short on cash and therefore could not pay a cash dividend The companys shares were selling at $57 per share on December 1, 2020 March 15, 2021 the company sold 10000 common shares for $450,000 Dividends Burlington did not declare any dividends until September 30, 2020 At that date total dividends of $500,000 were declared The company incurred the following profits (loss) since incorporation 2019 (25,000) 2020 675,000 2021 400,000 Required Determine the amount of dividends received by pr eferred and common shareholders from the September 30, 2020 declaration Prepare the journal entries for 2020 21 fiscal year Prepare the statement of changes in equity and the shareholders equity section of the balance sheet for September 30, 2021 Question 2 Mighty Contractors has been experiencing financial difficulties since start up The following are the ledger balances on December 31, 2020 Common shares (40,000 shares authorized and outstanding) $560,000 Retained Earnings (Deficit) (320,000) On January 2, 2021, the companys shareholders agreed to a financial reorganization whereby there was a transfer ownership of the shares to the creditors in full payment of the $450,000 notes payable At the time the building was on the books at $275,000 and it was determined that the market value was $380,000 Equipment was on the books at $85,000 but the appraised value was $65,000 Required Prepare the journal entries for the financial reorganization of Mighty Contractors

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Question 1 Burlington Clothes was incorporated on October 1, 2018. The articles of incorporation indicated the company was authorized to issue 600,000 shares of no

Question 1

Burlington Clothes was incorporated on October 1, 2018. The articles of incorporation indicated the company was authorized to issue 600,000 shares of no par value common shares and 200,000, $2 preferred shares that are cumulative and participating in distributions in excess of 5% of a dividend rate on the common shares. The companys year-end is September 30. The following information relates to the companys shareholders equity account.

80,000 common shares issued for cash on October 1, 2018, at $60 per share.
20,000 $2 preferred shares were issued on October 1, 2018 at $80 per share.
10,000 common shares exchanged on Dec 15, 2018, for land in the downtown core. The land had originally cost the seller $300,000 and had an estimated fair value of $550,000 on Dec 15, 2018 when Burlingtons share were selling for $58.
10,000 common shares issued on June 1, 2019; the shares had been subscribed for $55 per share on October 31, 2018.
October 1, 2020: subscriptions were received for 8,000 common shares at $60 per share. The first installment of $200,000 was received on this date and the final installment was paid on September 30, 2021.
November 1, 2020: the company purchased 4,000 of its common shares at $58 per share and restored these shares to the status of authorized but unissued.
December 1, 2020: the company declared a 5% stock dividend for shareholders of record on January 1, 2021. The company was short on cash and therefore could not pay a cash dividend. The companys shares were selling at $57 per share on December 1, 2020.
March 15, 2021: the company sold 10000 common shares for $450,000.
Dividends:

Burlington did not declare any dividends until September 30, 2020. At that date total dividends of $500,000 were declared.

The company incurred the following profits (loss) since incorporation:

2019 (25,000)

2020 675,000

2021 400,000

Required:

Determine the amount of dividends received by pr

eferred and common shareholders from the September 30, 2020 declaration.
Prepare the journal entries for 2020-21 fiscal year.
Prepare the statement of changes in equity and the shareholders equity section of the balance sheet for September 30, 2021.

Question 2

Mighty Contractors has been experiencing financial difficulties since start up. The following are the ledger balances on December 31, 2020:

Common shares (40,000 shares authorized and outstanding) $560,000

Retained Earnings (Deficit) (320,000)

On January 2, 2021, the companys shareholders agreed to a financial reorganization whereby there was a transfer ownership of the shares to the creditors in full payment of the $450,000 notes payable. At the time the building was on the books at $275,000 and it was determined that the market value was $380,000. Equipment was on the books at $85,000 but the appraised value was $65,000.

Required:

Prepare the journal entries for the financial reorganization of Mighty Contractors.