Question 5 (Q 6)

The shareholders' equity section of the statement of financial position of Dolce Corporation as at December 31, 2020, is given below:

Shareholders' equity:
Preferred shares, $9 non-cumulative, unlimited authorized, 200,000 shares issued and outstanding	$ 5,000,000
Common shares, unlimited authorized, par value $30, 250,000 shares issued and outstanding	7,500,000
Retained earnings	4,500,000
Total shareholders' equity	$17,000,000

The board of directors for Dolce Corporation feels it is important that its shares trade at or below $50 per share in order to attract the maximum number of investors. The market price is currently $150 per share.

Required

1. What would you recommend to the board of directors in order to maintain the share price at $50 per share?

2. What would be the expected market price per share based on your recommendation in part a above?

3. Prepare the journal entry for your recommendation.