Part I - Corporations - Common and Preferred Dividends
The shareholders' equity section of Dantantia Inc.'s balance sheet on January 1, 2016 contained the following information:
Shareholders' Equity
Authorized: 11,000,000 common shares and 200,000 $3 cumulative preferred shares.
Issued:
32,000 common shares - $900,000
2,000 cumulative preferred share - 200,000
Total share capital - 1,100,000
Retained earnings - 320,000
Total shareholders' equity - $1,420,000
On February 17, 2016, the company declared dividends of $85,000. The date of record and the date of payment are March 2 and March 31, 2016 respectively. Net income after tax for the year was $250,000. Dividends were last declared in 2014. No shares had been issued or redeemed since the last time dividends were paid.
(a) Calculate the amount of dividends to be paid to the preferred shareholders.
(b) Prepare any necessary journal entries on the date of dividend declaration, the date of record and the date of payment using cash dividends account.
(c) On December 20, 2016, Dantantia issues 1,000 common shares for $30,000 cash, and incurs a total of $2,000 in share issue costs. Journalize this transaction using the offset method.
(d) Calculate ending retained earnings balance at December 31, 2016.
(e) Calculate ending common shares balance and number of common shares at December 31, 2016.
Part II - Corporate Shareholders' Equity
Varghese Inc.'s balance sheet shows the following shareholders' equity section at the beginning of the year 2016.
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Varghese Inc. Shareholders' Equity As at January 1, 2016
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Share capital
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Preferred shares, $3 non-cumulative, 100,000 shares authorized, 10,000 shares issued and outstanding
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$130,000
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Common shares, 1,000,000 shares authorized, 40,000 shares issued and outstanding
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400,000
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Total share capital
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530,000
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Retained earnings
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425,000
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Total shareholders' equity
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$955,000
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Transactions for the year 2016:
Jan 6 - Sold 10,000 common shares for $150,000 cash.
Mar 8 - Issued 6,000 preferred shares in exchange for land valued at $84,000.
Jun 18 - Purchased 3,000 of its own common shares at a price of $16 per share.
Dec 15 - Declared a cash dividend of $70,000 to be paid on January 10, 2016. (Use cash dividends account.)
Dec 20 - Declared a two-for-one stock split.
Dec 31 - Closed net income of $194,000, which has already been closed to the income summary account, to retained earnings.
Dec 31 - Closed the cash dividends account.
a) Prepare any necessary journal entries for the above transactions.
b) Complete the shareholders' equity section as of December 31, 2016.
Part III - Income Statement
Dysa Inc. is a private Canadian company using ASPE. Its revenue and expense accounts contained the following amounts for the year ending December 31, 2016.
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Account Title
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Debit
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Credit
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Sales Revenue
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290,000
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Interest Revenue
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200
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Gain on Sale of Assets from Discontinued Operation
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17,400
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Operating Income from Discontinued Operations
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52,200
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Sales Returns and Allowances
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9,000
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Sales Discounts
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6,000
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Cost of Goods Sold
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130,500
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Insurance Expense
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4,000
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Utility Expense
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2,000
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Salaries Expense
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16,000
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Telephone Expense
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1,000
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Interest Expense
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800
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Depreciation Expense
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20,300
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Prepare an income statement under ASPE, assuming the tax rate is 30%.
Part IV - Statement of Financial Position
The adjusted trial balance for Picvy Corporation's June 30, 2016 year-end is as follows:
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Account Title
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Debit
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Credit
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Cash
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$42,793
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Accounts Receivable
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6,680
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Prepaid Insurance
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3,500
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Office Supplies
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3,340
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Property, Plant and Equipment
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100,200
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Accumulated Depreciation
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$36,072
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Accounts Payable
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4,676
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Unearned Revenue
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6,012
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Bank Loan - Current Portion
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5,344
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Bank Loan - Non-Current Portion
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23,380
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Common Shares, unlimited shares authorized, 4,000 shares issued and outstanding
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20,000
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Retained Earnings
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64,336
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Cash Dividends
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6,680
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Sales Revenue
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173,680
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Interest Revenue
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500
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Cost of Goods Sold
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79,893
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Depreciation Expense
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16,700
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Income Tax Expense
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1,445
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Insurance Expense
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8,000
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Interest Expense
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799
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Repairs Expense
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3,200
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Salaries Expense
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56,780
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Supplies Expense
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3,990
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Total
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$334,000
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$334,000
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Required: Prepare the statement of financial position under IFRS.