Reference no: EM132494990

Question - Falcon Corp. reported the following amounts in the shareholders' equity section of its December 31, 2013 statement of financial position:

Preferred shares, $8 dividend (10,000 shares authorized, 2,000 shares issued) $200,000

Common shares (100,000 authorized, 25,000 issued) 600,000

Contributed surplus 155,000

Retained earnings 250,000

Accumulated other comprehensive income 75,000

Total $1,380,000

During 2014, the company had the following transactions that affect shareholders' equity.

Paid the annual 2013 $8 per share dividend on preferred shares and a $3 per share dividend on common shares. These dividends had been declared on December 31, 2013.

Purchased 3,700 shares of its own outstanding common shares for $35 per share and cancelled them.

Issued 1,000 shares of preferred shares at $105 per share (at the beginning of the year).

Declared a 10% stock dividend on the outstanding common shares when the shares were selling for $45 per share.

Issued the stock dividend.

Declared the annual 2014 $8 per share dividend on preferred shares and a $2 per share dividend on common shares. These dividends are payable in 2015.

The contributed surplus arose from net excess of proceeds over cost on a previous cancellation of common shares. Total assets at December 31, 2013, were $1,940,000, and total assets at December 31, 2014, were $1,916,000. The company follows IFRS.

Instructions -

(a) Prepare journal entries to record the transactions above.

(b) Prepare the December 31, 2014 shareholders' equity section. Assume 2014 net income was $450,000 and comprehensive income was $455,000.