Exam 6: Corporations: Additional Topics and IFRS

Moreland Holdings Inc. has authorized share capital of an unlimited number of common shares and 1,000,000 preferred, $ 3-cumulative preferred shares. At January 1, 2021, the balances in its share capital accounts were $ 45,000 in common shares representing 15,000 shares and $ 30,000 in preferred shares representing 1,000 shares. The company had a balance of $ 50,000 in contributed surplus from previous years' repurchase of common shares. The retained earnings balance on that date was $ 180,000 and accumulated other comprehensive income was $ 62,000. Profit for the year ending December 31, 2021 was $ 24,000 and other comprehensive income items for the year were $ 5,000. There were no dividends in arrears at January 1, 2021 and no dividends were declared during 2021. During 2021, Moreland had the following share transactions: Mar 1 Issued 4,000 common shares for $ 5 each. Jun 30 Issued 500 preferred shares for $ 11 each. Sep 1 Issued 60,000 common shares in exchange for land valued at $ 285,000. Dec 1 Reacquired 50,000 common shares for $ 5.25 each. Instructions a) Journalize the share transactions. b) Prepare the equity section of Moreland's balance sheet at December 31, 2021 and describe any additional disclosure required related to share capital.

Jenny OTB Corporation reports the following shareholders' equity as of December 31, 2021: Instructions a) Assume the board of directors declares dividends totaling $ 1,500,000 to the shareholders. The preferred shares are cumulative, and no dividends were declared last year. Calculate the amount per share each class of shares will receive. b) Assume the board of directors authorizes a 2-for-1 split on the common shares. Calculate the number of shares outstanding after the split and the average per share amount for both classes of shares. c) Assume the board of directors authorizes a 10% stock dividend on the common shares after the stock split. The current selling price of the common shares is $ 11. Prepare the journal entry to record the declaration and distribution of the stock dividend.