Question

In: Accounting

Part A: Cato Corporation, a publicly traded company, was organized on January 1, 2018. It is...

Part A: Cato Corporation, a publicly traded company, was organized on January 1, 2018. It is authorized to issue an unlimited number of $3 noncumulative preferred shares and an unlimited number of common shares. The following share transactions were completed during the company’s first year of operations:

Jan. 10 Issued 1,000,000 common shares for $2 per share.

Mar. 1 Issued 22,000 preferred shares for $50 per share.

May 1 Issued 250,000 common shares for $3 per share. June 1 Reacquired and retired 9,000 common shares at $2 per share. Determine the average cost of each reacquired share to the nearest cent before recording this transaction.

July 24 Issued 36,700 common shares for $111,000 cash and used equipment. The equipment originally cost $33,000. It now has a carrying amount of $16,500 and a current value of $17,400. The common shares were trading for $4 per share on this date.

Sept. 4 Issued 10,000 common shares for $5 per share.

Nov. 1 Issued 3,800 preferred shares for $50 per share.

20 Reacquired and retired 16,000 common shares at $4 per share. Determine the average cost of each reacquired share to the nearest cent before recording this transaction.

Dec. 14 Declared a $77,000 cash dividend to the preferred shareholders, to shareholders of record on December 31, payable on January 10.

31 Reported net income of $1,320,000 for the year. New attempt is in progress. Some of the new entries may impact the last attempt grading.

Part B:

Your answer is partially correct. Record the above transactions for 2018, including any required entries to close dividends declared and net income. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round average cost per share to 2 decimal places, e.g. 2.25 and final answers to 0 decimal places.)

Transaction entries: Date Account Titles and Explanation Debit Credit

Jan. 10 Cash 2,000,000

Common Shares 2,000,000

Mar. 1 Cash 1,100,000

Preferred Shares 1,100,000

May 1 Cash 750,000

Common Shares 750,000

June 1 Common Shares 22,000

Cash 18,000

Contributed Surplus 4,000

July 24 Cash 111,000

Equipment 16,500

Common Shares 127,500

Sept. 4 Cash 50,000

Common Shares 50,000

Nov. 1 Cash 190,000

Preferred Shares 190,000

Nov. 20 Common Shares 36,160

Contributed Surplus 4,000

Retained Earnings 23,840 Cash 64,000

Dec. 14 Dividends Declared 77,000

Dividends Payable 77,000

Part C:

Closing entries:

Date	Account Titles and Explanation	Debit	Credit
Dec. 31	Retained Earnings	77,000
	Dividends Declared		77,000
	(To close cash dividends)
Dec. 31	Income Summary	1,320,000
	Retained Earnings		1,320,000
	(To close profit)

Prepare the shareholders’ equity section of the statement of financial position at December 31. (Enter account name only and do not provide descriptive information.)

Shareholders' Equity

Share Capital

Common Shares

Preferred Shares

Total Share Capital

Retained Earnings

Total Shareholders' Equity

Expert Solution

ekkarill92 answered 1 year ago

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