The post-closing trial balance of Sandhill Corporation at December 31, 2021, contains the following shareholders' equity accounts: $5 noncumulative preferred shares (8,900 issued) Common shares (387,700 issued) Retained earnings $1,023,500 1,926,800 3,143,050 A review of the accounting records reveals the following: 1. 2. 3. The January 1, 2021, balance in Preferred Shares was $1,023,500, Common Shares was $1,254,000 (313,500 shares), the balance in Contributed Surplus-Reacquisition of Common Shares was $29,700, and the balance in Retained Earnings was $2,439,000. One of the company's shareholders needed cash for a personal expenditure. On January 15, the company agreed to reacquire 19,800 shares from this shareholder for $7 per share. On July 1, the company corrected a prior period error that resulted in an increase to the Long-Term Investment account, as well as to the prior year's profit of $249,000 before income tax. On October 1, 94,000 common shares were sold for $8 per share. The preferred shareholders' dividend was declared and paid in 2021 for two quarters. Due to a cash shortage, the last two quarters' dividends were not declared or paid. Profit for the year before income tax was $759,000. The company has a 25% income tax rate. 4. 5. 6. Open general ledger accounts for the shareholders' equity accounts listed in item (1) above and enter opening balances. Preferred Shares Debit Credit Balance Date Explanation Ref. Jan. 1 Balance Common Shares Date Explanation Ref. Debit Credit Balance Jan. 1 Balance Balance Contributed Surplus-Reacquisition of Common Shares Date Explanation Ref. Debit Credit Jan. 1 Balance Retained Earnings Date Explanation Ref. Debit Credit Jan. 1 Balance Balance e Textbook and Media List of Accounts Prepare journal entries to record transactions (2) to (5) and post to general ledger accounts. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter Ofor the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit Jan. 15 (To record reacquisition of common shares.) (To record cash dividend.) (To record cash dividend.) (To record correction of error.) (Issued common shares for cash.) Preferred Shares Debit Ref. Credit Balance Date Explanation Jan. 1 Balance 1,023,500 Common Shares Debit Ref. Credit Date Explanation Jan. 1 Balance Jan. Reacquisition of 15 shares Balance 1,254,000 J1 Oct. 1 Issue of shares J1 Contributed Surplus-Reacquisition of Common Shares Ref. Debit Credit Balance 29,700 Date Explanation Jan. 1 Balance Jan. Reacquisition of 15 shares J1 Retained Earnings Debit Credit Date Explanation Jan. 1 Balance Jan. Reacquisition of 15 shares Ref. Balance 2,439,000 J1 July 1 Prior period error J1 e Textbook and Media List of Accounts Debit Credit Date Account Titles and Explanation Dec. 31 (To close Income Summary.) Dec. 31 (To close dividends to retained earnings.) Preferred Shares Debit Credit Date Explanation Jan. 1 Balance Ref. Balance 1,023,500 Common Shares Debit Credit Ref. Balance 1,254,000 Date Explanation Jan. 1 Balance Jan. Reacquisition of 15 shares Oct. 1 Issue of shares J1 79,200 1,174,800 1,926,800 J1 752,000 Contributed Surplus-Reacquisition of Common Shares Ref. Debit Credit Balance 29,700 Date Explanation Jan. 1 Balance Jan. Reacquisition of 15 shares J1 29,700 0 Retained Earnings Debit Credit Ref. Balance 2,439,000 J1 29,700 2,409,300 Date Explanation Jan. 1 Balance Jan. Reacquisition of 15 shares July 1 Prior period error Dec. Income Summary 31 Dec. Dividends 31 J1 186,750 2,596,050 J1 J1 e Textbook and Media List of Accounts Prepare a statement of changes in shareholders' equity for the year. (Enter negative amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). List variable costs before fixed costs.) SANDHILL CORPORATION Statement of Changes in Shareholders' Equity Preferred Shares Common Shares Contributed Surplus- Reacquisition of Common Shares $ $ $ Balance January 1, as previously reported Correction for understatement of investment, net of $62,250 income tax expense Balance January 1, as adjusted Issued for cash Reacquired shares Cash dividends -preferred Profit Balance, December 31 $ $ $ $ e Textbook and Media List of Accounts Prepare a statement of changes in shareholders' equity for the year. (Enter negative amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). List variable costs before fixed costs.) SANDHILL CORPORATION Statement of Changes in Shareholders' Equity Common Shares Contributed Surplus- Reacquisition of Common Shares Retained Earnings Total $ $ $ $ $ $ e Textbook and Media List of Accounts The post-closing trial balance of Sandhill Corporation at December 31, 2021, contains the following shareholders' equity accounts: $5 noncumulative preferred shares (8,900 issued) Common shares (387,700 issued) Retained earnings $1,023,500 1,926,800 3,143,050 A review of the accounting records reveals the following: 1. 2. 3. The January 1, 2021, balance in Preferred Shares was $1,023,500, Common Shares was $1,254,000 (313,500 shares), the balance in Contributed Surplus-Reacquisition of Common Shares was $29,700, and the balance in Retained Earnings was $2,439,000. One of the company's shareholders needed cash for a personal expenditure. On January 15, the company agreed to reacquire 19,800 shares from this shareholder for $7 per share. On July 1, the company corrected a prior period error that resulted in an increase to the Long-Term Investment account, as well as to the prior year's profit of $249,000 before income tax. On October 1, 94,000 common shares were sold for $8 per share. The preferred shareholders' dividend was declared and paid in 2021 for two quarters. Due to a cash shortage, the last two quarters' dividends were not declared or paid. Profit for the year before income tax was $759,000. The company has a 25% income tax rate. 4. 5. 6. Open general ledger accounts for the shareholders' equity accounts listed in item (1) above and enter opening balances. Preferred Shares Debit Credit Balance Date Explanation Ref. Jan. 1 Balance Common Shares Date Explanation Ref. Debit Credit Balance Jan. 1 Balance Balance Contributed Surplus-Reacquisition of Common Shares Date Explanation Ref. Debit Credit Jan. 1 Balance Retained Earnings Date Explanation Ref. Debit Credit Jan. 1 Balance Balance e Textbook and Media List of Accounts Prepare journal entries to record transactions (2) to (5) and post to general ledger accounts. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter Ofor the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit Jan. 15 (To record reacquisition of common shares.) (To record cash dividend.) (To record cash dividend.) (To record correction of error.) (Issued common shares for cash.) Preferred Shares Debit Ref. Credit Balance Date Explanation Jan. 1 Balance 1,023,500 Common Shares Debit Ref. Credit Date Explanation Jan. 1 Balance Jan. Reacquisition of 15 shares Balance 1,254,000 J1 Oct. 1 Issue of shares J1 Contributed Surplus-Reacquisition of Common Shares Ref. Debit Credit Balance 29,700 Date Explanation Jan. 1 Balance Jan. Reacquisition of 15 shares J1 Retained Earnings Debit Credit Date Explanation Jan. 1 Balance Jan. Reacquisition of 15 shares Ref. Balance 2,439,000 J1 July 1 Prior period error J1 e Textbook and Media List of Accounts Debit Credit Date Account Titles and Explanation Dec. 31 (To close Income Summary.) Dec. 31 (To close dividends to retained earnings.) Preferred Shares Debit Credit Date Explanation Jan. 1 Balance Ref. Balance 1,023,500 Common Shares Debit Credit Ref. Balance 1,254,000 Date Explanation Jan. 1 Balance Jan. Reacquisition of 15 shares Oct. 1 Issue of shares J1 79,200 1,174,800 1,926,800 J1 752,000 Contributed Surplus-Reacquisition of Common Shares Ref. Debit Credit Balance 29,700 Date Explanation Jan. 1 Balance Jan. Reacquisition of 15 shares J1 29,700 0 Retained Earnings Debit Credit Ref. Balance 2,439,000 J1 29,700 2,409,300 Date Explanation Jan. 1 Balance Jan. Reacquisition of 15 shares July 1 Prior period error Dec. Income Summary 31 Dec. Dividends 31 J1 186,750 2,596,050 J1 J1 e Textbook and Media List of Accounts Prepare a statement of changes in shareholders' equity for the year. (Enter negative amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). List variable costs before fixed costs.) SANDHILL CORPORATION Statement of Changes in Shareholders' Equity Preferred Shares Common Shares Contributed Surplus- Reacquisition of Common Shares $ $ $ Balance January 1, as previously reported Correction for understatement of investment, net of $62,250 income tax expense Balance January 1, as adjusted Issued for cash Reacquired shares Cash dividends -preferred Profit Balance, December 31 $ $ $ $ e Textbook and Media List of Accounts Prepare a statement of changes in shareholders' equity for the year. (Enter negative amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). List variable costs before fixed costs.) SANDHILL CORPORATION Statement of Changes in Shareholders' Equity Common Shares Contributed Surplus- Reacquisition of Common Shares Retained Earnings Total $ $ $ $ $ $ e Textbook and Media List of Accounts