Question

1. Shiloh’s Entertainment has the following Shareholders’ Equity as of January 1, 2018:

Preferred Shares, 8% cumulative, 10,000 issued, 50,000 authorized                          $ 500,000

Common Shares, 250,000 issued, unlimited authorized                                                   1,000,000

Contribution Surplus – Common Shares                                                                                      45,000

Retained Earnings                                                                                                                            2,500,000

Accumulated Other Comprehensive Income                                                                           150,000

During the year the following transactions occurred:

• A buyback of 5,000 common shares at a market value of $50 per share;
• A 10% common stock dividend was declared and paid at a market value of $49 per share;
• A 2:1 common share stock split was declared and paid, after the split the market valve of a share was $25;
• Issued 5,000 common shares at a market value of $27 per share and there was a $5,000 legal fee associated with the issuance;
• Bought a piece of specialized equipment with a fair value of by issuing 5,000 common shares at a market price of $26 per share.

Required: Based on the above information

1. Prepare ALL the journal entries for the year pertaining to Shiloh’s Shareholders’ Equity;
2. Complete the Shiloh’s 2018 Changes to Shareholders’ Equity (denoting number of shares outstanding for both Preferred and Common Shares).

Answer 1

Date	Account Titles and Explanation	Debit	Credit
1)	Treasury stock (5000 shares x $50)	$    250,000.00
	Cash		$                 250,000.00
2)	Retained Earnings (250,000 x 10% x $49)	$ 1,225,000.00
	Common Stock Dividends    Distributable (250,000 x 10% x $4)		$                 100,000.00
	Contributed surplus (250,000 x 10% x $45)		$              1,125,000.00
	Common Stock Dividends Distributable	$    100,000.00
	Cash		$                 100,000.00
3)	Memo—two-for-one stock split    increases number of shares to    500,000 = (250,000 X 2) and reduces par value to $2 per share	No Entry
4)	Organizational Expenses (5000 x $27)	$    135,000.00
	Common stock (5000 x $2)		$                   10,000.00
	Contributed surplus (5000 x $25)		$                 125,000.00
5)	Equipment (5000 x $26)	$    130,000.00
	Common stock (5000 x $2)		$                   10,000.00
	Contributed surplus (5000 x $24)		$                 120,000.00
	Shiloh’s Entertainment
	Balance Sheet
	Shareholders' Equity
	Paid-in capital
	Preferred shares, 8% cumulative, 50000 authorized;10,000 issued and outstanding	$    500,000.00
	Common shares, unlimited authorized; 560,000 issued and outstanding	$ 2,240,000.00
	Contributed Surplus	$ 1,415,000.00
		$ 4,155,000.00
		$ 8,310,000.00
	Retained earnings ( 250000 - 1225000)	$ 1,275,000.00
	Accumulated other comprehensive income	$    150,000.00
	Less: Treasury Stock	$ (250,000.00)
	Total shareholders’ equity	$ 9,485,000.00
	# common shares outstanding = (250000x x 2 x 1.10 ) + 5000 + 5000	560,000.00	shares