Question

Blue Jays Ltd. reported the following balances at January 1, 2020:

Common shares................................................................................	$370,000
Preferred shares................................................................................	74,000
Retained earnings.............................................................................	70,000
Accumulated other comprehensive income .....................................	71,000
Blue Jays’ corporate tax rate............................................................	26.5%

During the year, Blue Jays performed the following:

1. Cumulative effect of change from straight-line to accelerated depreciation resulted in a reduction to retained earnings of $35,000, before tax;
2. Issued common shares for a proceed of $37,000;
3. Retired 40% of preferred shares outstanding;
4. Earned net income of $310,000 and;
5. Generated other comprehensive income of $64,000;
6. Declared total dividend of $124,000

   Instructions

   Prepare a statement of shareholders’ equity in proper format for Blue Jays Ltd. for the year ended December 31, 2020.

Answer 1

Statement of shareholders’ equity					Amount $
	Common Shares	Preferred Shares	Retained earnings	Accumulated other Comprehensive Income	Total
Beginning Balance , January 1,2020	370,000	74,000	70,000	71,000	585,000
Cumulative effect of change, net of tax saving ( 35,000 x (1-26.5%) )			-25,725		-25,725
Issued common shares	37,000				37,000
Retired 40% of preferred shares ( 74,000 x 40% )		-29,600			-29,600
Earned net income			310,000		310,000
Generated other comprehensive income				64,000	64,000
Declared total dividend			-124,000		-124,000
Ending Balance, December 31,2020	407,000	44,400	230,275	135,000	816,675