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Scott and Peter have owned a small health food manufacturing company (S&P Health) since 2015 The company was authorized to issue 5,000,000 shares of no-par
Scott and Peter have owned a small health food manufacturing company (S&P Health) since 2015 The company was authorized to issue 5,000,000 shares of no-par value common shares and 100,000 shares of $10 par value 10% cumulative preferred shares. Scott and Peter were the only shareholders up until 2020. Shareholder Equity accounts of S&P Health at December 31, 2019 year-end are as follows: Preferred Shares, 10,000 issued and outstanding (owned by Scott) $ 100,000 Common shares, (Scott and Peter bought equal numbers at $2.00/share) $ 1,000,000 Retained Earnings $ 500,000 (Preferred dividends are 2 years in arrears) The following transactions occurred from January 1, 2020 onward: 1. George, a close friend of Peter, purchased 20% of the authorized preferred shares at $10/share. 2. The company's lawyer agreed to accept 30,000 common shares of S&P Health in exchange for $90,000 worth of legal services he had rendered to the company. 3. Peter needed to cash to fund his son's tuition fees to dental school. On September 30, the three common shareholders agreed that S&P Health would buy back and cancel 50,000 common shares at $3.50 per share. 4. On October 31, the S&P Health declared a cash dividend of $150,000. 5. The directors declared a 4 for 1 stock split on November 1. 6. On December 15, the company declared a 10% share dividend when the fair market value of the common shares was $1.25. The shares will be issued on in 2021. Required: For each of the items above, provide the journal entry (ies) needed and state "no entry" if none is required. (15 marks)
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