Question 1 Comprehensive Question

DonutLand Ltd. reported the following information in the Shareholders Equity section of the at the start of the year on January 1, 2021. There were no cash dividends paid out in 2018, 2019, or 2020. DonutLand Ltd. prepares quarterly financial statements.

Contributed Capital

Preferred shares, $3.00, cumulative, 350,000 shares authorized,

8,500 shares issued and outstanding. $195,000

Common shares, unlimited number or shares authorized,

13,000 shares issued and outstanding. $129,000

Total contributed Capital $324,000

Retained Earnings $218,000

Total Shareholders Equity. $542,000

The following transactions took place during the first quarter of 2021:

Jan. 8 Split the common shares 3 for 1.

Jan. 29 Issued 5,000 common shares for $5.00 per share.

Feb. 1 Declared a cash dividend of $150,000 payable on February 10 to the shareholders on record on Feb 4

Feb. 18 Repurchased 10,000 common shares paying $2.80 per share.

Feb. 27 Declared a 15% stock dividend on the common shares, distributable on Mar. 17 to the shareholders on record on Mar. 8. The market value of the shares is $4.50 per share on Feb 27.

Mar. 19 Repurchased 15,000 common shares for $4.75 per share.

Net Income for the quarter was $85,000.

Required:

a) Record the necessary journal entries for above transactions. If there are no journal entries required on a date mentioned, indicate so on the appropriate date. (NOTE: No explanations are required on the journal entries.) (NOTE: If needed, round the share price to 2 decimal places and use the ROUNDED value in your next calculation.)

b) Prepare the Statement of Shareholders Equity for DonutLand Ltd. for the first quarter based on the net income and transactions discussed above.