Question 1

During its first year of operations, Millwoods Enterprises Inc. had the following transactions related to its common shares:

Jan 5 Issued 5,000 common shares to Michelle Vogel for $ 1 each.

Mar 15 Issued 10,000 common shares in exchange for equipment transferred from Vogel. The equipment was valued at $ 40,000.

Apr 10 Issued 3,500 shares to a consulting firm for management consulting services as settlement of a $ 14,000 invoice.

Sep 30 Issued 4,000 common shares to Renee Vogel for $ 5 each.

Instructions

a) Journalize the share transactions.

b) Calculate the average cost of the common shares of Millwoods Enterprises Inc. at December 31.

Question 2

Exercise 19 Bancroft Holdings Inc. has authorized share capital of an unlimited number of common shares and 1,000,000 preferred, $ 3-cumulative preferred shares. At January 1, 2021, the balances in its share capital accounts were $ 45,000 in common shares representing 15,000 shares and $ 30,000 in preferred shares representing 1,000 shares. The retained earnings balance on that date was $ 180,000. Profit for the year ending December 31, 2021 was $ 24,000. There were no dividends in arrears at January 1, 2021 and no dividends were declared during 2021.

During 2021, Bancroft had the following share transactions:

Mar 1 Issued 4,000 common shares for $ 5 each.

Jun 30 Issued 500 preferred shares for $ 11 each.

Sep 1 Issued 60,000 common shares in exchange for land valued at $ 285,000.

Instructions

a) Journalize the share transactions.

b) the equity section of Bancroft's balance sheet at December 31, 2021 and describe any disclosure requirements related to share capital.

c) Calculate return on equity for 2021.