Question

Major Communications Ltd., a publicly traded company that specializes in data capture, has been in operation for several years. On October 1, 2019, it had 10 million common shares authorized and 1,490,000 shares issued at an average value of $28 per share. As well, there were 1 million preferred shares authorized, with 220,000 of them issued at $14 per share. During the fiscal year ended September 30, 2020, the company generated net income after taxes of $22,800,000 and other comprehensive loss of $5,410,000. On October 1, 2019, the balance in Retained Earnings was $20,440,000 and the balance in Accumulated Other Comprehensive Income was $980,000. The preferred shares pay an annual dividend of $1.20. During the fiscal year 2020, the following transactions affected shareholders’ equity: 1. On November 1, 2019, 390,000 new common shares were issued at $30 per share. 2. On March 15, 2020, a 5% common stock dividend on the outstanding shares was declared and distributed when the market price was $47 per share. 3. On September 1, 2020, a dividend of $5.30 per common share was declared. The date of record was September 15, 2020, with the date of payment being October 5, 2020. 4. The preferred dividend for the year was declared and paid.Prepare the statement of changes in shareholders’ equity as at September 30, 2020. (If an amount reduces the account balance then enter with negative sign, e.g. -15,000 or in parenthesis, e.g. (15,000).)Prepare the shareholders’ equity section of the statement of financial position as at September 30, 2020. (Enter negative answers using either a negative sign preceding the number e.g. -5,125 or parentheses e.g. (5,125).)

Answer 1

Preferred Stock Retained Total Major Communications Ltd. Statement of Changes in Stockholders' Equity For Year Ended Setember 30,2020 Common Paid In apital in Stock excess of Par-Common Stock 41,720,000 10,920,000 780,000 2,632,000 1,786,000 Earnings Accumulated Other Comprehensive Income /(Loss) 980,000 3,080,000 20,440,000 Balance, October 1 Add Common shares issued Stock Dividends Issued Cash Dividends Declared Preferred Dividend Compehensive Loss Net Income Balance, December 31 (4,418,000) -10462200 -264000 66,220,000 11700000 0 -10462200 -264000 -5410000 22800000 84,583,800 (5,410,000) 22800000 28,095,800 55,272,000 2,566,000 3,080,000 (4,430,000)

Major Communications Ltd. Balance Sheet Partial September 30,2020 Stockholders' equity Paid-in capital Capital stock Preferred stock Common stock Total Capital stock Additional paid-in capital Paid In Capital excess of Par value - Common Stock 2,566,000 Total additional paid-in capital Total paid-in capital Retained earnings 28,095,800 Accumulated Other Comprehensive Income /(Loss) (4,430,000) Total paid-in capital and Retained Earnings Total stockholders' equity 3,080,000 55,272,000 58,352,000 2,566,000 60,918,000 23,665,800 84,583,800