Question

Question 5:                                                                                                                                         10 Marks

Acme Corporation’s balance sheet reported Contributed Capital as follows.

Preferred Shares, $ 2.50 cumulative,

24,000 shares authorized and issued                                                               $ 600,000.00

Common Shares,

30,000 shares authorized and issued                                                                $ 375,000.00

1. Prepare the journal entry to record the issuance of the preferred share and the common shares. (4)

GENERAL JOURNAL                                Page 1
Date	Account titles and Explanation		Debit	Credit

1. Dividends paid during 2012, 2013, and 2014 were $ 40,000, $ 95,000, and $ 130,000 respectively. Using the table below, calculate the total dividends paid to the preferred and to the common shareholders in each of these years (remember the preferred shares are cumulative):

	Preferred Dividend	Common Dividend	Total Dividend Paid
2012			$ 40,000
2013			$ 95,000
2014			$ 130,000

Charts of Accounts

Question One
Cash	Sales
Accounts Receivable (A/R)	Cost of Goods Sold (COGS)
HST Receivable	Warranty Expense
Merchandise Inventory (MI)	Interest Expense
	Income Tax Expense
Accounts Payable (A/P)
Income Tax Payable
HST Payable
Interest Payable
Notes Payable
Estimated Warranty Liability

Question Two	Question Three
Cash	Cash
Accounts Receivable (A/R)	Capital, Reagan
Vehicle	Capital, Carter
Office Equipment	Capital, Clinton
Capital, Ross	Capital, Bush
Capital, Galley
Capital, Roberts
Loan Payable
Question Five
Cash
Preferred Shares
Common Shares

Answer 1

Q5.
A.

Date	Account Titles	Debit	Credit
1	Cash	$       600,000
	Preferred Shares		$       600,000
	(To record issue of preferred shares)
2	Cash	$       375,000
	Common Shares		$       375,000
	(To record issue of common shares)

The above entries can also be clubbed together in one entry, by debiting cash by $975,000

B

Year	Preferred Dividend	Common Dividend	Total Dividend
2012	$       40,000	$                 -	$          40,000
2013	$       80,000	$         15,000	$          95,000
2014	$       60,000	$         70,000	$        130,000

Annual Preference Dividend = 24000 x $2.50 = $60,000

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