Question
Zumba Inc. had the following balances in their equity accounts at December 31, 2020. There were 50,000 preferred shares with an ending balance of $200,000.
Zumba Inc. had the following balances in their equity accounts at December 31, 2020. There were 50,000 preferred shares with an ending balance of $200,000. The preferred shares had a dividend preference of $2.00 / share. There were 150,000 common shares issued with an ending balance of $300,000. The amount in Retained Earnings was $150,000. The company was authorized to issue unlimited preferred and common shares.
The following equity transactions occurred during 2021:
July 2 - Exchanged 90,000 common shares for land with a fair market value of $225,000.
July 31 -The corporation issued 1,000 preferred shares at $5 per share.
Sept.15 -The board of directors declared a cash dividend payable to shareholders of record on September 25 of $120,000 payable on September 30.
Sept.30 - The cash dividend declared on September 15 was paid.
Oct 5 -The board of directors declared a 10% common share dividend, distributable on October 31 to the October 20 shareholders of record. The shares were sold at $4 per share.
Oct. 31 - The share dividend declared on October 5 was distributed.
Nov. 2 - The board of directors declared a 2 for 1 share split to common shareholders of record on November 15 to be distributed on November 30. (Include note disclosure)
Dec.31 - The Income Summary account had a $357,000 credit balance. Close the Income Summary Account and the Dividend accounts (if applicable).
- Prepare journal entries for the year 2021. Omit explanations but show calculations.
- Prepare statement of changes in Equity for the year ended December 31, 2021.
- Prepare the equity section of the balance sheet for the year-end December 31, 2021.
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