At December 31, 2016, the shareholders’ equity section of the balance sheet for the Apex Auto Corporation totalled $2,000,000. Following are the balances of various general ledger accounts at that date.
|
Preferred shares, $.40, cumulative |
Issued 50,000 shares |
$500,000 |
|
Common shares |
Issued 50,000 shares |
750,000 |
|
Retained earnings—unrestricted |
750,000 |
The following transactions occurred during 2017.
|
Mar. |
20 |
A cash dividend of $0.20 per preferred share was declared, payable April 1 to shareholders of record on March 25. |
|
Apr. |
1 |
Payment of previously declared dividend on preferred shares was made. |
|
June |
15 |
The regular semi-annual cash dividend on common shares of $0.40 per share was declared, payable July 10 to shareholders of record on July 1. |
|
July |
10 |
Payment of the previously-declared dividend on common shares was made. |
|
Aug. |
1 |
10,000 common shares were issued for $200,000 cash. |
|
Nov. |
15 |
The board of directors met and restricted an additional $75,000 for the plant extension.* |
|
Dec. |
15 |
The regular semi-annual dividend of $0.40 per common share was declared payable December 31, 2017. |
|
Dec. |
31 |
A cash dividend totalling $25,000 was paid. |
|
*complete only if Appendix 2 is covered |
Required:
- What amount of cash dividends would be distributed to common shareholders on December 31, 2017?
- Prepare journal entries for the 2017 transactions. Ignore closing entries. Descriptions are not necessary.
- Prepare the statement of changes in equity for the year ended December 31, 2017 assuming net income for the year amounted to $165,000.
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