Question

Golden Valley Corporation, a publicly-traded company, is authorized to issue 206,000 $4 cumulative preferred shares and an unlimited number of common shares. On January 1, 2018, the general ledger contained the following shareholders’ equity accounts:

Record the above transactions, including any entries required to close dividends and net income. (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. Round average cost per share to 2 decimal palces, e.g. 2.25 and final answers to 0 decimal places.)
Preferred shares (8,500 shares issued) $467,500 Common shares (72,100 shares issued) 1,009,400 Contributed surplus 23,000 Retained earnings 848,000 Accumulated other comprehensive income 10,400 The following equity transactions occurred in 2018: Feb. 6 Issued 10,000 preferred shares for $610,000. Apr. 6 Issued 20,600 common shares for $566,500. 27 Reacquired and retired 3,200 common shares at $16 per share. May 29 Declared a semi-annual cash dividend to the preferred shareholders of record at June 12, payable July 1. Aug. 22 Issued 8,400 common shares in exchange for a building. At the time of the exchange, the building was valued at $164,500 and the common shares at $149,000. Dec. 14 The board of directors decided there were insufficient funds to declare the semi-annual dividend to the preferred shareholders. 31 Net income for the year was $593,000.

Answer 1

Journal entries:

Date	Account title and explanation	Debit	Credit
Feb. 6	Cash	$610,000
	Preferred stock		$610,000
	[Issuance of preferred stock]
Apr.6	Cash	$566,500
	Common stock		$566,500
	[Issuance of common stock]
Apr.27	Common stock	$51,200
	Cash [3,200 x $16]		$51,200
	[Reacquire and retirement fo common shares]
May 29	Dividends	$74,000
	Dividends payable-preferred [18,500 x $4]		$74,000
	[Declaration of cash dividends]
Aug 22	Building	$149,000
	Common shares		$149,000
	[Issuance of common shares in exchange for building]
Dec.14	No entry
Dec.31	Income summary	$593,000
	Retained earnings		$593,000
	[To close income summary account]
Dec.31	Retained earnings	$74,000
	Dividends		$74,000
	[To close dividends account]

Note:

Dividends liability arises only when the board approves and declared. Hence no entry on Dec.14

Par value is not given. Hence assumed that shares are issued at 'No par'.