Question
The shareholders equity of Deer Ltd. at the end of 2020 and 2019 appeared as follows: 2020 2019 Share capital, preferred shares, $2 cumulative, 2,000,000
The shareholders equity of Deer Ltd. at the end of 2020 and 2019 appeared as follows:
2020 | 2019 | |||
Share capital, preferred shares, $2 cumulative, 2,000,000 shares authorized, 24,800 shares issued | $173,600 | $173,600 | ||
Share capital, 5,000,000 common shares authorized, 1,270,000 common shares issued (20191,090,000 shares) | 5,260,000 | 4,360,000 | ||
Retained earnings | 4,212,000 | 3,427,000 | ||
Total shareholders equity | $9,645,600 | $7,960,600 |
During 2020, Deer paid a total of $121,000 in cash dividends.
.
.
A) Assume the preferred shares were not in arrears at December 31, 2019. How was the $121,000 in cash dividends distributed between the two types of shares in 2020?
Date. Preferred. Common. Total.
2020. $ $ $
.
.
B) Assume the preferred share dividends were in arrears for one year; that is, the dividends were not paid in 2019. How was the $121,000 in cash dividends distributed between the two classes of shares?
date Preferred common total
2019 $ $ $
2020 $ $ $
___________________________________________
$ $ $
C) Both common shares and retained earnings changed during the year. Provide journal entries that would account for the changes.
No. | Account and explanation | Debit | Credit |
1. | |||
(common shares issued during year) | |||
2. | |||
(Dividends declared during year) | |||
3. | |||
(Dividends paid during year) | |||
4. | |||
(Net income for the year closed to retained earnings) | |||
5. | |||
(Dividends Declared for the year closed to retained earnings) |
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