Question 1

During its first year of operations, Millwoods Enterprises Inc. had the following transactions related to its common shares:
Jan 5 Issued 5,000 common shares to Michelle Vogel for $ 1 each.
Mar 15 Issued 10,000 common shares in exchange for equipment transferred from Vogel. The equipment was valued at $ 40,000.
Apr 10 Issued 3,500 shares to a consulting firm for management consulting services as settlement of a $ 14,000 invoice.
Sep 30 Issued 4,000 common shares to Renee Vogel for $ 5 each.
Instructions
a) Journalize the share transactions.
b) Calculate the average per share amount of the common shares of Millwoods Enterprises Inc. at December 31, 2021.

Accepted Answer

The answer of During its first year of operations, Millwoods...

Question 2

Ahab Fisheries Inc. has authorized share capital of an unlimited number of common shares and 300,000 $ 2-cumulative preferred shares.
As of January 1, 2021, 50,000 common shares had been issued at an average cost of $ 4 each. During 2021, 10,000 common shares were issued on April 1 for cash of $ 45,000 and on July 1, 20,000 were issued at $ 4.75 each. On December 15, a cash dividend of $ 0.50 per share on all common shares was declared, payable to shareholders of record on December 31, and payable on January 20, 2022.
On January 1, 2021, the first preferred shares were issued. $ 600,000 was received for 80,000 preferred shares. On October 1, the annual dividends on the preferred shares were declared, payable to shareholders of record on October 15, and payable on October 28.
Retained earnings on January 1, 2021 were $ 336,000 and accumulated other comprehensive income was $ 57,000. Ahab had profit of $ 323,000 in 2021, and other comprehensive income items totalling $ 37,500. All dividends were paid on their due dates. On December 31, 2021, Ahab's common shares were trading at $ 76.50.
Instructions
a) Calculate the profit available to common shareholders.
b) Calculate the weighted average number of common shares in 2021.
c) Calculate the earnings per share.
d) Calculate the price earnings ratio at December 31, 2021.

Accepted Answer

The answer of Ahab Fisheries Inc. has authorized share capital...

Question 3

Sonoma Lakes Ltd. (SLL) has the following authorized share capital:
Unlimited Common voting shares
500,000 Class A, $ 5 cumulative preferred shares
500,000 Class B, $ 10 noncumulative preferred shares
During 2021, SLL had the following share transactions for cash:
Jan 1 Issued 50,000 common shares for $ 100,000.
Mar 12 Issued 1,000 Class A preferred shares for $ 60,000.
Apr 30 Issued 20,000 common shares for $ 2.50 per share.
Jun 20 Issued 3,000 Class B preferred shares for $ 70 per share.
Jul 2 Reacquired 10,000 common shares for $ 3 per share.
SLL did not declare any dividends during 2021. On December 31, 2022, a dividend of $ 3 per share was declared on preferred shares issued.
Instructions
a) Journalize the share transactions.
b) Calculate the number of common shares issued at December 31, 2021 and the average per share amount of common share.

Accepted Answer

The answer of Sonoma Lakes Ltd. (SLL) has the following...

Question 4

The following information is available for Reynolds Corporation:  The company accountant, in preparing financial statements for the year ending December 31, 2021, has discovered the following information:
The company's previous bookkeeper, who has been fired, had recorded depreciation expense on a machine in 2019 and 2020 using the double diminishing-balance method of depreciation. The bookkeeper neglected to use the straight-line method of depreciation which is the company's policy. The cumulative effect of the error on prior years was $ 9,000. Depreciation was calculated by the straight-line method in 2021. Reynolds' average tax rate is 22%. During 2021, Reynolds declared and paid cash dividends of $ 80,000.
Instructions 
a) Calculate the impact on retained earnings.
b) Prepare the statement of retained earnings for 2021.

Accepted Answer

The answer of The following information is available for Reynolds...

Question 5

Shockey Electric Ltd. has a December 31 year end. On January 1, 2021, the company had the following shareholder's equity accounts.  Shockey Electric Ltd. had the following transactions during 2021:
  The company reported income of $ 710,000, including other comprehensive income of $ 12,000 for 2021.
Instructions 
a) Record all of the transactions.
b) Prepare the Statement of Changes in Shareholders' Equity.
c) Calculate Backwater's 2021 earnings per share.

Accepted Answer

The answer of Shockey Electric Ltd. has a December 31...

Question 6

On January 1, 2021, Only You Merchandise Ltd. had 5,000 common shares issued for a total of $ 7,500, and no other shares or contributed capital. During 2021, Only You had the following transactions:
Jan 15 Issued 1,500 common shares for $ 1.50 each.
Mar 31 Settled an account for legal expenses by issuing 3,000 shares. The value of the legal services was $ 5,000.
Jun 30 Reacquired 1,700 shares for $ 2.00 each.
Sep 30 Issued 10,000 shares in exchange for equipment with a fair value of $ 22,500.
Instructions
a) Record the transactions.
b) Calculate the number and average price of common shares issued at the end of 2021.

Accepted Answer

The answer of On January 1, 2021, Only You Merchandise...

Question 7

On January 1, 2021, Grieve Grocers Inc.'s retained earnings account had a deficit (negative) balance of $ 75,000. During the year ended December 31, 2021, the company's second year of operations, Grieve had the following events that occurred in the sequence listed:
1. Declared and distributed a 10% stock dividend on common shares. Prior to the dividend, Grieve had 60,000 common shares issued with a total cost of $ 160,000, and the market value of the shares was $ 6.50 each.
2. Approved at two-for-one stock split.
3. Declared a cash dividend in the amount of $ 1 per share which is payable 15 days after the company's year end.
4. Profit for the year before taxes was $ 712,000.
5. Corrected the calculation of the prior year's cost of goods sold, which had been reported as $ 875,000 but which should have been $ 900,000, and adjusted the resulting tax savings.
6. Incurred an Other Comprehensive Loss of $ 174,500 (before income taxes).
Instructions
Prepare Grieve's statement of changes in shareholders' equity for the year ended December 31, 2021 assuming that Grieve has an income tax rate of 25%.

Accepted Answer

The answer of On January 1, 2021, Grieve Grocers Inc.'s...

Question 8

On January 1, 2020, Accounting For You Professional Corporation had $ 2,000,000 of common shares that were issued at $ 10 and retained earnings of $ 1,000,000. The corporation issued 100,000 common shares at $ 13 per share on July 1. On August 1, 2020, the company declared a $ 0.50 cash dividend to be paid on August 31, 2020 to shareholders of record on August 15, 2020. On December 15, the board of directors declared a 10% stock dividend to shareholders of record on December 31, 2020, payable on January 15, 2021. The market value of Accounting For You Professional Corporation shares was $ 15 per share on December 15 and $ 14 per share on December 31. Profit for 2020 was $ 500,000.
Instructions
a) Journalize the entries related to the above transactions.
b) Prepare the shareholders' equity section of the balance sheet for Accounting For You Professional Corporation at December 31, 2020.
c) Calculate the dividend payout ratio for 2020.

Accepted Answer

The answer of On January 1, 2020, Accounting For You...

Question 9

Cheers Corporation reported the following information related to the year ended July 31, 2021:  Instructions
Prepare Cheer's statement of comprehensive income, statement of changes in shareholders' equity, and the shareholders' equity section of Cheer's balance sheet at July 31, 2021. Ignore tax effects.

Accepted Answer

The answer of Cheers Corporation reported the following information related...

Question 10

Westcock Shipbuilding Ltd. has a December 31 year end. On January 1, 2021, the company had the following shareholder's equity accounts.  Westcock Shipbuilding Ltd. had the following transactions during 2021:
  The company reported a profit of $ 450,000 and other comprehensive income of $ 15,000 for 2021.
Instructions 
a) Record all of the transactions.
b) Prepare the Statement of Changes in Shareholders' Equity.

Accepted Answer

The answer of Westcock Shipbuilding Ltd. has a December 31...

Question 11

The following information is taken from the trial balance of GlaxonSmith Supplies Ltd. at December 31, 2021, the company's year end. GlaxonSmith has a 25% tax rate. One of the entries making up the balance of retained earnings is an adjustment that was required due to the overstatement of prior year's depreciation expense by $ 1,600 which is net of tax effect.  Instructions
Prepare the income statement and statement of retained earnings for GlaxonSmith for the year ended December 31, 2021 using the multiple-step format for the income statement.

Accepted Answer

The answer of The following information is taken from the...

Question 12

At January 1, 2021, Stevenson Inc. had the following shares authorized and issued:  On December 31, Stevenson declared a $ 9 per share dividend on all issued preferred shares. Stevenson's 2021 profit was $ 435,000.
Instructions 
a) Calculate the weighted average number of common shares in 2021.
b) Calculate the profit available to common shareholders for 2021.
c) Calculate the 2021 earnings per share.

Accepted Answer

The answer of At January 1, 2021, Stevenson Inc. had...

Question 13

Harvey Hovercraft Inc. reported the following shareholders' equity:
Share capital:  Instructions 
a) The board of directors declared a 5% common stock dividend when the market price of the shares was $ 20 per share. Prepare the necessary journal entries to record the declaration and distribution of the common shares dividend.
b) What effect did the stock dividend have on:
i. total assets
ii. total liabilities
iii. total share capital
iv. total shareholders' equity

Accepted Answer

The answer of Harvey Hovercraft Inc. reported the following shareholders'...

Question 14

On January 1, 2021, Chu Corporation had retained earnings of $ 422,000. During the year, Chu had the following selected transactions:
1. Declared cash dividends of $ 100,000.
2. Suffered a loss of $ 70,000.
3. Corrected understatement of 2020 profit because of an inventory error $ 45,000. The company has a 30% income tax rate.
Instructions
Prepare a statement of retained earnings for the year.

Accepted Answer

The answer of On January 1, 2021, Chu Corporation had...

Question 15

Moe Money

Accepted Answer

The answer of Moe Money...

Question 16

Saha Company had profit of $ 1,020,000 for the year ended December 31, 2021. At the beginning of the year, there were 300,000 common shares authorized, and 47,000 shares issued. In addition, during 2021, the company declared a dividend of $ 7 per share on its 10,000 preferred shares and issued 50,000 common shares on October 1.
Instructions
Calculate earnings per share for the year ended December 31, 2021.

Accepted Answer

The answer of Saha Company had profit of $ 1,020,000...

Question 17

12345678 Ontario Ltd. which has authorized share capital of an unlimited number of common shares, and no other authorized classes of shares, had the following share transactions during 2021, its first year of operations:  Instructions
Record the 2021 share transactions.

Accepted Answer

The answer of 12345678 Ontario Ltd. which has authorized share...

Question 18

Brown Nose Corporation's shareholders' equity section at December 31, 2020 appears below:
Shareholders' equity  On June 30, 2021, the board of directors of Brown Nose Corporation declared a 10% stock dividend, payable on July 31, 2021, to shareholders of record on July 15, 2021. The fair market value of Brown Nose Corporation's shares on June 30, 2021, was $ 12 per share.
On December 1, 2021, the board of directors declared a 2-for-1 stock split effective December 15, 2021. Brown Nose Corporation's shares were selling for $ 16 on December 1, 2021, before the stock split was declared. Profit for 2021 was $ 225,000 and there were no cash dividends declared.
Instructions
a) Prepare the journal entries on the appropriate dates to record the stock dividend and the stock split.
b) Fill in the amount that would appear in the shareholders' equity section for Brown Nose Corporation at December 31, 2021, for the following items:
1. Common shares $____________
2. Number of shares issued $____________
3. Retained earnings $____________
4. Total shareholders' equity $____________ 
a) Prepare the journal entries on the appropriate dates to record the stock dividend and the stock split.
b) Fill in the amount that would appear in the shareholders' equity section for Brown Nose Corporation at December 31, 2021, for the following items:

Accepted Answer

The answer of Brown Nose Corporation's shareholders' equity section at...

Question 19

At July 1, 2020, Peters Corporation had the following share capital:  *The preferred dividends are 2 years in arrears.
On January 1, 2021, the board of directors declared and paid a 15% common stock dividend when the market price of common shares was $ 23.50. On April 1, 2021, the company sold an additional 1,000,000 common shares for proceeds of $ 5,680,000. The corporation earned $ 722,000 during the year and paid $ 186,000 in dividends.
Instructions 
a). Calculate Peters Corporation's earnings per share for the year ended June 30, 2021, assuming the company paid $ 186,000 in cash dividends.
b) Calculate Peters Corporation's earnings per share for the year ended June 30, 2021, assuming the company paid $ 186,000 in cash dividends but there were no preferred dividends in arrears.
c) Calculate Peters Corporation's earnings per share for the year ended June 30, 2021, assuming the preferred dividends are noncumulative and $ 50,000 in total cash dividends were paid during the year.

Accepted Answer

The answer of At July 1, 2020, Peters Corporation had...

Question 20

Strict Fitness Ltd. has a December 31 year end. On January 1, 2021, the company had the following shareholder's equity accounts.  Strict Fitness Ltd. had the following transactions during 2021:
  The company reported net income of $ 520,000 and comprehensive income of $ 592,000 for 2021.
Instructions 
a) Record all of the transactions.
b) Prepare the Statement of Changes in Shareholders' Equity.
c) Calculate Strict Fitness' 2021 earnings per share. (Hint: weighted average number of common shares outstanding has been correctly computed at 208,167 shares)

Accepted Answer

The answer of Strict Fitness Ltd. has a December 31...

Exam 6: Corporations: Additional Topics and IFRS

Moe Money

12345678 Ontario Ltd. which has authorized share capital of an unlimited number of common shares, and no other authorized classes of shares, had the following share transactions during 2021, its first year of operations: Instructions Record the 2021 share transactions.