Question

Requred: 1. prepare journal entries to reflect the above transcations. Show the split between common and preferred dividends in the dividend entries as apropriate.

A14-7 Share Retirement: On 1 January 20X5, BC Ventures Corp. reported the following in shareholders equity Preferred shares, no-par value, $0.70, cumulative, authorized, unlimited shares $386,000 issued, 80,000 shares Common shares, no-par value, authorized unlimited shares issued, 80,000 shares 642,000 Contributed capital on retirement of common shares 14.000 t250,000 Retained earnings 38 000 AOCI for foreign exchange gains on foreign subsidiary During 20X5 certain shares were reacquired. In accordance with the regulations in BC Ventures incorporating legislation, all reacquired shares were retired. Transactions were as follows 15 January Bought 7,000 preferred shares for $5 20 per share Bought 2.000 common shares for $11 per share 12 February Bought 4,000 preferred shares for $4.00 per share 25 February Bought 5.000 preferred shares for $6.00 per share 26 Aprit Bought 8,000 common shares for $7.50 per share 16 July Other transactions during the year Stock dividend on commen shares. 59% declared and distributed The board of 30 July directors agreed to capitalize the dividend at the market vaiue of $7 75 per share The board of directors declared a dividend adequate to pay S1 per share to al common shareholders This meant that the board alsc had to declare the preferred dividend 30 November Pags 1013 Required:

2. prepare the shareholders equity section of the SFP after reflecting the above transcations. Earnings were $308,200 and total comphrensive income was $351,000, reflecting earnings plus an aditional gain of $42,800 on foregin exchange caused by a foreign suubsidary.

Answer 1

Part-1)

Date	Particulars	Debit	Credit
15-Jan	Preferred shares ($4.825 * 7,000)	33,775
	Retained earnings	2,625
	Cash ($5.20 * 7,000)		36,400
	($386,000/80,000 = $4.825)
12-Feb	Common shares ($8.025 * 2,000)	16,050
	Contributed capital on common share retirement	5,950
	Cash ($11 * 2,000)		22,000
	($642,000/80,000 = $8.025)
25-Feb	Preferred shares ($4.825 * 4,000)	19,300
	Contributed capital on preferred share retirement		3,300
	Cash ($4 * 4,000)		16,000
26-Apr	Preferred shares ($4.825 * 5,000)	24,125
	Contributed capital on preferred share retirement	3,300
	Retained earnings	2,575
	Cash ($6 * 5,000)		30,000
16-Jul	Common shares ($8.025 * 8,000)	64,200
	Contributed capital on common share retirement		4,200
	Cash ($7.50 * 8,000)		60,000
30-Jul	Stock dividend (or retained earnings)	27,125
	Common shares		27,125
	(70,000 shares * 5% = 3,500 * $7.75)
30-Nov	Preferred dividend declared (or retained earnings)	44,800
	Common dividends declared ( or retained earnings)	73,500
	Preferred dividends payable (64,000 * $0.70)		44,800
	Common dividends payable (73,500 * $1)		73,500

Part-2)

Shareholder’s Equity
Contributed capital:
Preferred shares, no-par value, $0.70, cumulative, authorized
unlimited shares issued and outstanding, 64,000 shares
($386,000 - $33,775 - $19,300 - $24,125)	308,800
Common shares, no-par value, authorized unlimited shares,
and outstanding 73,500 shares
($642,000 - $16,050 - $64,200 + $27,125)	588,875
Contributed capital on common share retirement
($14,000 - $5,950 + $4,200)	12,250
Total contributed capital	909,925
Retained earnings
($1,250,000 + 308,200 - $2,625 - $2,575 - $27,125 - $44,800 - $73,500)	1,407,575
Reserve for foreign exchange gains on foreign subsidiary
($38,000 + $42,800)	80,800
Total shareholders’ equity	2,398,300