Reference no: EM133039854

Question 1 - On May 30, Year 6, Rose Hill Corporation accepted subscriptions for 20,000 common shares. On that date, the shares were selling for $20 each. Subscribers paid 40% down and must pay the remainder in six months. On September 30, Year 6, the balance of the subscription price was received, and the shares were issued. Prepare all journal entries related to the share subscriptions.

Question 2 - Sahali Corp. issued 1,000,000 common shares at $7 a share during April Year 1. On September 23, Year 7, Sahali repurchased 50,000 shares for $13 a share. Sahali is incorporated under the CBCA and therefore retired these shares. Prepare the journal entry to record the repurchase of the shares.

Question 3 - In each of the following independent cases, it is assumed that the corporation has outstanding 20,000, $0.80, preferred shares, with a carrying value of $200,000, and 80,000 common shares, with a carrying value of $800,000. For each item below, you must show your work. Clearly label your calculations, and clearly label your answer and highlight it with bold print. Correct answers without showing how you arrived at the solution will receive only part marks.

1. Assume that the preferred dividends are cumulative and non-participating, and preferred dividends are paid up to date through Year 5. At December 31, Year 6, the board of directors wants to distribute $125,000 in dividends. How much will the preferred shareholders receive?

2. Assume that the preferred dividends are cumulative and non-participating. Although dividends have been paid regularly up to Year 3, no dividends were declared in Year 4 or Year 5. At December 31, Year 6, the board of directors wants to distribute $200,000 in dividends. How much will the preferred shareholders receive?

3. Assume that the preferred dividends are cumulative and fully participating. Although dividends have been paid regularly up to Year 3, no dividends were declared in Year 4 or Year 5. At December 31, Year 6, the board of directors wants to distribute $250,000 in dividends. How much will the preferred shareholders receive?

Question 4 - Rayleigh Corporation follows IFRS and started Year 2 with 1,200,000 common shares outstanding. During Year 2, Rayleigh completed the following share transactions:

June 1: Issued 300,000 shares

July 31: Repurchased 200,000 shares

August 31: Issued 200,000 shares

September 30: 2 for 1 stock split

October 31: Issued 200,000 shares

Calculate the weighted average number of shares outstanding for Year 2. Use a table to show your calculations. Clearly indicate your final answer.

Question 5 - For Year 8, Westmount Corp. had 200,000 common shares outstanding for the full year. Westmount follows IFRS. Market prices of the common shares during Year 8 were:

January 1: $45; Year's average: $50; December 31: $52.

Westmount's income tax rate is 30%.

During Year 8, there were:

1. 30,000 outstanding options to buy common shares at $40 a share;

2. 20,000, $7, no par value, cumulative and convertible preferred shares outstanding. Each preferred share is convertible into three common shares;

3. $2,000,000 of 8% convertible bonds issued at par. Each $1,000 bond is convertible into 20 common shares.

The corporation reported $750,000 net income for calendar Year 8.

Calculate basic and diluted earnings per share for Year 8. Show all calculations for possible part marks. Review the four example videos from Module 4. Arrange your answer as per the best method used in the videos.