Question

Riverbed Corporation is authorized to issue an unlimited number of $5 cumulative preferred shares and an unlimited number of common shares. On February 1, 2020, the general ledger contained the following shareholders' equity accounts:

Preferred shares (10,000 shares issued)		$460,000
Common shares (72,000 shares issued)		1,224,000
Retained earnings		799,000

The following equity transactions occurred during the year ended January 31, 2021:

Feb.	28		Issued 5,500 preferred shares for $319,000.
Apr.	12		Issued 210,000 common shares for $3.78 million.
May	25		Issued 5,500 common shares in exchange for land. At the time of the exchange, the land was valued at $93,500.
Jan.	1		Paid dividend of $2.50 per share to preferred shareholders.
Jan.	31		A loss of $43,000 was incurred for the year.

(a)

Correct answer iconYour answer is correct.

Journalize the transactions and the entries to close dividends and the Income Summary account. (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. Record journal entries in the order presented in the problem.)

Date	Account Titles and Explanation	Debit	Credit
Feb. 28Apr. 12May 25Jan. 1Jan. 31
	(To record issuance of shares.)
Feb. 28Apr. 12May 25Jan. 1Jan. 31
	(To record issuance of shares.)
Feb. 28Apr. 12May 25Jan. 1Jan. 31
	(To record issuance of shares.)
Feb. 28Apr. 12May 25Jan. 1Jan. 31
	(To record declaration and payment of dividend.)
Feb. 28Apr. 12May 25Jan. 1Jan. 31
	(To close Income Summary.)
Feb. 28Apr. 12May 25Jan. 1Jan. 31
	(To close dividends.)

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List of Accounts

  

Attempts: 2 of 5 used

(b)

Open general ledger accounts for the shareholders' equity accounts and post entries from previous part. (Post entries in the order of Journal entry presented in the previous part (a).)

Preferred Shares
Date	Explanation	Ref.	Debit	Credit	Balance
Feb. 1	Balance	√
Feb. 28		J1
Common Shares
Date	Explanation	Ref.	Debit	Credit	Balance
Feb. 1	Balance	√
Apr. 12		J1
May 25		J1
Cash Dividends—Preferred
Date	Explanation	Ref.	Debit	Credit	Balance
Jan. 1		J1
Jan. 31	Closing entry	J1
Retained Earnings
Date	Explanation	Ref.	Debit	Credit	Balance
Feb. 1	Balance	√
Jan. 31	Closing Entry	J1
Jan. 31	Closing Entry	J1

Answer 1

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