Question 2 (33 marks, 65 minutes) Allegro Corporation (Allegro) is a private company that designs equipment for tuning musical instruments. The company has been expanding and obtained financing from different sources. The company had the following in its shareholders' equity on January 1, 2020: Common shares, unlimited number authorized, 100,000 shares issued and outstanding $ 290,000 Contributed surplus, from previous cancellation of common shares 316,000 Retained earnings 2,200,000 Total shareholders' equity $ 2,806,000 Allegro prepares financial statements in accordance with ASPE and uses straight-line amortization to account for any premium or discount. Accrued interest is recorded using an expense account. The following transactions occurred during 2020: Jan 15: Subscriptions were sold for 11,300 common shares at $26 per share. The first payment for $11 per share was received on this date. Feb 15: The second payment for the shares sold on subscription was for $15 per share. All payments were received on this date except for 1,500 shares. The subscription contract states that all amounts paid to date would be retained by Allegro and treated as a forfeiture. At this point in time, common shares were issued to subscribers who fully paid on the contract. Mar 1: Allegro issu $200,000, 8% bonds at 109, including accrued interest. Interest is payable semi- annually on December 1 and on June 1 with the bonds maturing on December 1, 2029. June 1: Semi-annual interest on the bonds was paid. Sept 20: The company repurchased 21,960 common shares at $27 per share. Dec 1: Allegro paid semi-annual interest on the bonds. Dec 15: The company declared a 5% stock dividend at the fair value of the shares to be issued on January 31, 2021. The common shares had a fair value of $30 per share on December 15. Dec 31: At year end, Allegro had the following liabilities listed in their general ledger: A note payable in the amount of $85,000 to Cadence Suppliers that bears annual interest at 3.5% and is due January 31, 2022. A $350,000 loan from Segno Bank, due August 1, 2025, with annual interest of 4%. $1,000,000 in serial bonds, of which $250,000 is due each June 30. The first instalment of $250,000 is to be paid to the serial bond holders on June 30, 2021. The company has recorded journal entries for this year's interest related to these liabilities. Required: Start this question on a new page. Show all calculations and analysis to get full marks. Round all numbers to the nearest dollar. a) Prepare the necessary journal entries to record the above transactions by Allegro Corporation for its December 31, 2020 year end. (25.5 marks] b) Prepare any required note disclosure for the company's liabilities for the year ended December 31, 2020. [7.5 marks] END OF QUESTION 2 Question 2 (33 marks, 65 minutes) Allegro Corporation (Allegro) is a private company that designs equipment for tuning musical instruments. The company has been expanding and obtained financing from different sources. The company had the following in its shareholders' equity on January 1, 2020: Common shares, unlimited number authorized, 100,000 shares issued and outstanding $ 290,000 Contributed surplus, from previous cancellation of common shares 316,000 Retained earnings 2,200,000 Total shareholders' equity $ 2,806,000 Allegro prepares financial statements in accordance with ASPE and uses straight-line amortization to account for any premium or discount. Accrued interest is recorded using an expense account. The following transactions occurred during 2020: Jan 15: Subscriptions were sold for 11,300 common shares at $26 per share. The first payment for $11 per share was received on this date. Feb 15: The second payment for the shares sold on subscription was for $15 per share. All payments were received on this date except for 1,500 shares. The subscription contract states that all amounts paid to date would be retained by Allegro and treated as a forfeiture. At this point in time, common shares were issued to subscribers who fully paid on the contract. Mar 1: Allegro issu $200,000, 8% bonds at 109, including accrued interest. Interest is payable semi- annually on December 1 and on June 1 with the bonds maturing on December 1, 2029. June 1: Semi-annual interest on the bonds was paid. Sept 20: The company repurchased 21,960 common shares at $27 per share. Dec 1: Allegro paid semi-annual interest on the bonds. Dec 15: The company declared a 5% stock dividend at the fair value of the shares to be issued on January 31, 2021. The common shares had a fair value of $30 per share on December 15. Dec 31: At year end, Allegro had the following liabilities listed in their general ledger: A note payable in the amount of $85,000 to Cadence Suppliers that bears annual interest at 3.5% and is due January 31, 2022. A $350,000 loan from Segno Bank, due August 1, 2025, with annual interest of 4%. $1,000,000 in serial bonds, of which $250,000 is due each June 30. The first instalment of $250,000 is to be paid to the serial bond holders on June 30, 2021. The company has recorded journal entries for this year's interest related to these liabilities. Required: Start this question on a new page. Show all calculations and analysis to get full marks. Round all numbers to the nearest dollar. a) Prepare the necessary journal entries to record the above transactions by Allegro Corporation for its December 31, 2020 year end. (25.5 marks] b) Prepare any required note disclosure for the company's liabilities for the year ended December 31, 2020. [7.5 marks] END OF QUESTION 2