Reference no: EM132482418

Question 1a) Determine dividends in arrears.

Beauce Incorporated had 45,000, $2.50 preferred shares issued. It did not pay a dividend to the preferred shareholders in 2016 and 2017.

Question (a) What are the dividends in arrears, if any, at December 31, 2017, if the shares are cumulative and if they are noncumulative?

Question (b) How are dividends in arrears reported in the financial statements?

Question 1b) Record issue of shares in cash and noncash transactions.

Santiago Corp., a private corporation, received its articles of incorporation on January 3, 2017. It is authorized to issue an unlimited number of common shares and $1 preferred shares. It had the following share transactions during the year:

Jan. 12  Issued 50,000 common shares for $5 per share.

24       Issued 950 common shares in payment of a $4,500 bill for legal services.

July 11 Issued 1,000 preferred shares for $25 per share.

Oct. 1 Issued 10,000 common shares in exchange for land. The land's fair value was estimated to be $55,000. Santiago's accountant estimated that the fair value of the shares issued might be as high as $6 per share.

Instructions

Question (a) Journalize the share transactions.

Question (b) Calculate the average per share amount for the common shares.

Question 1c) Record issue of shares in cash and noncash transactions.

Hao Corporation had the following transactions during the current period.

Mar. 2  Issued 5,000 common shares to its legal counsel in payment of a bill for $30,000 for services performed in helping the company incorporate.

June 12 Issued 60,000 common shares for $375,000 cash.

July 11 Issued 1,000, $3 noncumulative preferred shares at $110 per share cash.

Nov.28 Issued 2,000, $3 noncumulative preferred shares at $95 per share cash.

Instructions

Journalize the transactions.

Question 1d) Determine dividends in arrears.

Windswept Power Corporation issued 150,000, $4.50 cumulative preferred shares to fund its first investment in wind generators. In its first year of operations, it paid $450,000 of dividends to its preferred shareholders. In its second year, the company paid dividends of $900,000 to its preferred shareholders.

Instructions

Question (a) What is the total annual preferred dividend supposed to be for the preferred shareholders?

Question (b) Calculate any dividends in arrears in years 1 and 2.

Question (c) Explain how dividends in arrears should be reported in the financial statements.

Question (d) If the preferred shares were noncumulative rather than cumulative, how much dividend would the company likely have paid its preferred shareholders in year 2?