Question

P11-2A Remmers Corporation, a publicly traded company, was organized on January 1, 2018. It is authorized to issue an unlimited number of $3 noncumulative preferred shares and an unlimited number of common shares. The following share transactions were completed during the company's first year of operations: Jan. 10 Issued 1,000,000 common shares for $2 per share. Mar. 1 Issued 20,000 preferred shares for $50 per share. May 1 Issued 250,000 common shares for $3 per share. June 1 Reacquired and retired 10,000 common shares at $2 per share. Determine the average cost of each reacquired share to the nearest cent before recording this transaction. July 24 Issued 33,500 common shares for $120,000 cash and used equipment. The equipment originally cost $30,000. It now has a carrying amount of $15,000 and a current value of $16,000. The common shares were trading for $4 per share on this date. Sept. 4 Issued 10,000 common shares for $5 per share. Nov. 1 Issued 4.000 preferred shares for S50 per share. 20 Reacquired and retired 15.000 common shares at S4 per share. Determine the average cost of each reacquired share to the nearest cent before recording this transaction. Dec. 14 Declared a $72,000 cash dividend to the preferred shareholders, to shareholders of record on December 31, payable on January 10. 31 Reported net income of $1.3 million for the year. Instructions (a) Record the above transactions for 2018, including any required entries to close dividends dedared and net income. (b) Open Taccounts and post to the shareholders equity accounts. (c) Prepare the shareholders' equity section of the statement of financial position at December 31.

Answer 1

Answer
Date	Account Titles and Explanation	Debit	Credit
Jan. 10	Cash (1000000 x $2)	$      20,00,000
	Common shares		$      20,00,000
	(To record issue of common shares)
Mar. 1	Cash (20000 x $50)	$      10,00,000
	Preferred shares		$      10,00,000
	(To record issue of preferred shares)
May. 1	Cash (250000 x $3)	$        7,50,000
	Common shares		$        7,50,000
	(To record issue of common shares)
Jul. 24	Cash	$        1,20,000
	Equipment	$           16,000
	Common shares		$        1,36,000
	(To record issue of common shares)
Sep. 1	Cash (10000 x $5)	$           50,000
	Common shares		$           50,000
	(To record issue of common shares)
Nov. 1	Cash (4000x $50)	$        2,00,000
	Preferred shares		$        2,00,000
	(To record issue of preferred shares)
Dec. 15	Cash dividends	$           72,000
	Cash dividends payable		$           72,000
	(To record declaration of preferred dividends)
	Closing entries:
Dec. 31	Retained earnings	$           72,000
	Cash dividends		$           72,000
	(To close cash dividends)
Dec. 31	Income summary	$      13,00,000
	Retained earnings		$      13,00,000
	(To close profit)
Note: The equipment has been recorded at its fair value since the same is available.

Preferred Shares
		Mar. 1	$    10,00,000
		Nov. 1	$      2,00,000
		Dec. 31 Bal.	$    12,00,000
Common Shares
		Jan. 10	$    20,00,000
		May. 1	$      7,50,000
		Jul. 24	$      1,36,000
		Sep. 1	$         50,000
		Dec. 31 Bal.	$    29,36,000
Cash Dividends
Dec. 15	$       72,000	Dec. 31 CE	$         72,000
Dec. 31 Bal.	$              -
Retained Earnings
Dec. 31 CE	$       72,000	Dec. 31 CE	$    13,00,000
Dec. 31 Bal.	$ 12,28,000	Dec. 31 Bal.

REMMERS CORPORATION
Statement of Financial Position (Partial)
December 31, 2018
Shareholders' Equity
Share Capital
Preferred Shares	$ 12,00,000
Common Shares	$ 29,36,000
Total Share Capital	$ 41,36,000
Retained Earnings	$ 12,28,000
Total Shareholders' Equity	$ 53,64,000
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