Question #2

Wilma Corporation reported the following amounts in its shareholders equity section on the December 31, 2019 balance sheet:

Preferred shares, $5 dividend, 10,000 shares authorized, $180,000

2,800 shares outstanding

Common shares, 100,000 authorized, 25,000 outstanding 100,000

Contributed Surplus1 122,000

During 2020, the following transactions impacted shareholders equity:

a) Jan 15: Purchased 6,000 shares of its own common shares for $27 per share and retired them

b) Feb 1: Issued 1,500 preferred shares at $72 per share

c) Nov 1: Declared a 10% stock dividend on the outstanding common shares when they were trading at $32 per share.

d) Dec 31: Declared the annual 2020 preferred share dividend and a $3 per share dividend on the common shares. These dividends are payable in 2021.

Required:

Prepare journal entries for each of the transactions in 2020