Question

1. Headland Corporation showed the following information on its financial statements on December 31, 2021:

Preferred Shares, no par value $6 cumulative, 280,000 shares authorized,       110,000 shares issued and outstanding		$15,400,000
Common Shares, no par value, unlimited shares authorized,       460,000 shares issued and outstanding		$14,260,000

The following transactions occurred, in the order given, during 2022:

(a)		April 15: Received subscriptions and down payments for 126,000 common shares at $36 per share. The subscription contracts call for 55% of the subscription price to be paid upon receipt, and the remaining 45% to be paid on June 30. In the event of default on the subscriptions, the company will retain the down payment.
(b)		May 1: Issued 110,000 preferred shares at $175 per share.
(c)		June 30: Received payment for 98,000 of the subscribed common shares; the remaining 28,000 defaulted. Issued the share certificates for the appropriate number of shares.
(d)		August 5: Repurchased and cancelled 30,000 common shares at a cost of $26 per share.
(e)		September 15: Declared dividends for preferred shares (dividends had not been paid the previous year). Also declared $2.00 per share dividend for common shares. Both dividends are to be paid on November 1 to shareholders of record on October 1.
(f)		If the preferred shares had a $140 par value, what would be the journal entry for the May 1 issuance of preferred shares in part (b)?

Prepare the journal entries to record the above transactions for Headland Corporation for 2022. (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 share price to 2 decimal places for intermediate calculations, e.g. 52.75 and final answer to 0 decimal places, e.g. 5,275.)

No.	Account Titles and Explanation	Debit	Credit
(a)
	(To record sale of shares on a subscription basis)
	(To record collection of down payment)
(b)
(c)
	(To record receipt of cash for the final installment on subscribed shares)
	(To record default on subscribed shares)
	(To record issuance of common shares for those subscribed and paid for)
(d)
(e)
	(To record dividend declared)
	(To record dividend paid)
(f)

List of Accounts

• Accounts Payable
• Accounts Receivable
• Accumulated Depreciation - Automobiles
• Accumulated Depreciation - Buildings
• Accumulated OCI
• Automobiles
• Bonds Payable
• Buildings
• Cash
• Common Shares
• Common Shares Subscribed
• Common Stock Dividends Distributable
• Contributed Surplus
• Contributed Surplus - Donated Land
• Deficit
• Dividend Receivable
• Dividend Revenue
• Dividends
• Dividends Payable
• Equipment
• FV - NI Investments
• FV - OCI Investments
• Furniture and Fixtures
• Gain on Appreciation of Capital Asset
• Gain on Disposal of Investments FV-OCI
• Income Summary
• Inventory
• Investment in Sinking Fund
• Investment Income or Loss
• Land
• Legal Expense
• Loss in Value of Investment Property
• Machinery
• No Entry
• Notes Payable
• Preferred Shares
• Property Dividends Payable
• Retained Earnings
• Share Subscriptions Receivable
• Treasury Shares
• Unrealized Gain or Loss
• Unrealized Gain or Loss - OCI

Please provide correct answers and use the accounts given in the list.

Answer 1

Journal entries in the books of Headland corporation as on 2022

Date	Particulars	Debit	Credit
April 15	Bank ac Dr Common share subscribed (Comany received Subscrition for 126000 common shares @19.8(36*55%)	2494800	2494800
	Common share subscribed ac Dr Common shares (Share application amount transferred to Share capital account)	2494800	2494800
May 1	Bank ac Dr Preferred shares ( Issued 110000 preferred shares @175 per share)	19250000	19250000
Jun 1	Share subscription ac Dr Common shares (Share allotment for 126000 shares transferred to share capital)	2041200	2041200
	Bank ac Dr Share Subscrption recievable Dr Share Subscription (Share allotment for 98000 shares @16.2 were received in )	1587600 453600	2041200
Aug 5	Common share ac Dr Tressury share Bank (Company repurchsed 30000 common shares @26 per share and at discount @10/share)	1080000	300000 780000
	No entry for cancellation
Sep 15	Contributed surplus ac Dr Dividend (Net profit appropriated for dividend)	224000	2240000
	Dividend ac Dr Dividend payable(6*110000*2+2*460000) ( Preference(110000 shres @6+Cumilative for last year) and common dividend (2/share for 460000 Shares)	224000	224000
Oct 1	Dividend payble ac Dr Bank ( dividend pai to common share and equity share)	2240000	2240000
May 1	If the preferred shares had a $140 par value Bank ac Dr(110000*140) Unrealised loss or gain ac Dr(110000*35) Preferred shares ( Issued 110000 preferred shares at a discount 35/share )	15400000 3850000	19250000