Question 4: 14 Marks

Acme Corporation sold the following number of shares for cash on January 1, 2016, its first year of operations.

1. Preferred Shares, $ 2.60 cumulative,

20,000 shares authorized and issued $ 800,000.00

2. Common Shares,

50,000 shares authorized and issued $ 600,000.00

1. Prepare the journal entry to record the issuance of the preferred share and the common shares. (4)

GENERAL JOURNAL Page 1
Date	Account titles and Explanation	PR	Debit	Credit
Jan 1, 16

2. Calculate the total dividends paid to the preferred and to the common shareholders in each of the following years (remember the preferred shares are cumulative): (6)

	Preferred Dividend	Common Dividend	Total Dividend Paid
2016			$ 30,000
2017			$ 85,000
2018			$ 120,000

Based on the information in the table above prepare the journal entries (2) to record the declaration and payment of the $ 30,000.00 dividends paid in 2016, assuming the following information.

(You need to use the correct Dividends Payable account). (4)

• Declaration Date: October 31, 2016
• Date of Record: November 25, 2016
• Date of Payment: December 15, 2016

GENERAL JOURNAL Page 1
Date	Account titles and Explanation	PR	Debit	Credit