Reference no: EM132598696

The balance sheet for Tactex Controls Inc., provincially incorporated in 2018, reported the following components of equity on December 31, 2019.

Tactex Controls Inc. Equity Section of the Balance Sheet

December 31, 2019

Contributed capital:

Preferred shares, $2.5 cumulative,

unlimited shares authorized; 24,000 shares issued and outstanding $396,000

Common shares, unlimited shares authorized; 79,000 shares issued and outstanding 739,000

Total contributed capital$1,135,000

Retained earnings 382,000 Total equity$1,517,000

In 2020 and 2021, the company had the following transactions affecting shareholders and the equity accounts:

2020

Jan.1 Sold 34,000 common shares at $11.04 per share.

5 The directors declared a total cash dividend of $235,000 payable on Feb.

28 to the Feb. 5 shareholders of record.

Dividends had not been declared for the years 2018 and 2019. All of the preferred shares had been issued during 2018.

Feb.28 Paid the dividends declared on January 5.

July1 Sold preferred shares for a total of $157,200. The average issue price was $25 per share.

Dec.31 Closed the dividend accounts along with the $577,200 credit balance in the Income Summary account.

2021 Sept.

5 The directors declared the required cash dividend on the preferred shares and a $1.8 per common share cash dividend payable on October 28 to the October 5 shareholders of record.

Oct.28 Paid the dividends declared on September 5.

Dec.31 Closed the Cash Dividends account along with the $543,600 credit balance in the Income Summary account.

Required:

Question 1. Prepare journal entries to record the transactions and closings for 2020 and 2021. The company uses a cash dividends account to record declared dividends.

Question 2. Prepare a statement of changes in equity for the year ended December 31, 2021.(Amounts to be deducted should be indicated by a minus sign.)

Question 3. Prepare the equity section of the company's balance sheet as of December 31, 2021.