Question

On January 1, 2017, Conway Ltd. had the following shareholders' equity accounts:

Common shares, unlimited number of shares authorized, 1.5 million issued - $1,650,000

Retained earnings- 550,000

It was also authorized to issue an unlimited number of $6 noncumulative preferred shares. During 2017, the corporation had the following transactions and events related to its shareholders' equity:

Jan 2 Issued 100,000 preferred shares at $66 per share

March 31 Paid quarterly dividend to preferred shareholders

April 18 Issued 250,000 common shares at $1.30 each

June 30 Paid quarterly dividend to preferred shareholders

Sept 30 Paid quarterly dividend to preferred shareholders

Dec 31 Paid quarterly dividend to preferred shareholders

Dec 31 Profit for the year was $160,000

a) Journalize the transactions and the entries to close dividends and the Income Summary account

b) Open general ledger accounts for the shareholder's equity accounts, enter the beginning balances and post transactions in part a)

c) Prepare the shareholder's equity section of the Balance Sheet at Dec 31, 2017, including any required disclosures. Assume Conway is under ASPE

Answer 1

02.01.2017			bank account		dr	6600000
			To prefernce share capital a/c				6600000
31.03.2017			dividend ac/c		dr	1.5
			To Bank Account a/c				1.5
18.04.2017			bank account a/c		dr	325000
			To Share capital a/c				325000
			(250000*1.3)
30.06.2017			dividend ac/c		dr	1.5
			To Bank Account a/c				1.5
30.09.2017			dividend ac/c		dr	1.5
			To Bank Account a/c				1.5
31.12.2017			dividend a/c		dr	1.5
			To Bank Account a/c				1.5
31.12.2017			Retained Earnings a/c		dr	160000
			To Profit and loss a/c				160000
			share capital equity account account
	date	debit	amount	date	credit	amount
	02.01.2017	bank	6600000	01.01.2017	op balance	1650000
	18.04.2017	bank	325000	31.12.2017	closing balance	5275000
			6925000			6925000
				conway ltd
		Balance sheet as on 31 january 2017
		liabilities		amount $
		share capital
		Authorised Capital
		Issued and paid up Capital		6925000
		retained earnings		550000
		add:profit for the year		160000
				710000