Question
The following is the shareholders' equity section of Hartford Corp. at December 31, 2020: Preferred shares, authorized 130,000 shares; issued 31,000 shares $ 930,000
The following is the shareholders' equity section of Hartford Corp. at December 31, 2020: Preferred shares, authorized 130,000 shares; issued 31,000 shares $ 930,000 Common shares (unlimited authorized, 68,000 issued) Contributed surplus Total paid-in capital Retained earnings Total shareholders' equity 1,700,000 121,000 2,751,000 2,495,200 $ 5,246,200 Notes: The preferred shares have a $2 dividend rate, are cumulative, and participate in distributions in excess of a $3 dividend on the common shares. No dividends were paid in 2018 or 2019. Consider the 3 requirements independently: Requirement 1 (5 marks) . On December 31, 2020, Hartford wants to pay a cash dividend of $5 per share to common shareholders. (Note: when recording the journal entry, determine how much cash would be needed for the total amount and the amounts to be paid to preferred and common shareholders) Requirement 2 (4 marks) . The company decides instead to acquire and cancel 10,700 common shares at the current fair value of $45 per share. Prepare the entry to record the retirement, assuming the contributed surplus balance arose from previous cancellations of common shares. Requirement 3 (4 marks) . The company decides instead that it will declare and issue a 15% stock dividend on the outstanding common shares at their fair value. The common shares' fair value on the date of declaration is $45 per share. Prepare the entry on the date of distribution.
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