Determine the amount of dividends received

Reference no: EM132850674

Question - Burlington Clothes was incorporated on October 1, 2018. The articles of incorporation indicated the company was authorized to issue 600,000 shares of no par value common shares and 200,000, $2 preferred shares that are cumulative and participating in distributions in excess of 5% of a dividend rate on the common shares. The company's year-end is September 30. The following information relates to the company's shareholders' equity account.

1. 80,000 common shares issued for cash on October 1, 2018, at $60 per share.

2. 20,000 $2 preferred shares were issued on October 1, 2018 at $80 per share.

3. 10,000 common shares exchanged on Dec 15, 2018, for land in the downtown core. The land had originally cost the seller $300,000 and had an estimated fair value of $550,000 on Dec 15, 2018 when Burlington's share were selling for $58.

4. 10,000 common shares issued on June 1, 2019; the shares had been subscribed for $55 per share on October 31, 2018.

5. October 1, 2020: subscriptions were received for 8,000 common shares at $60 per share. The first installment of $200,000 was received on this date and the final installment was paid on September 30, 2021.

6. November 1, 2020: the company purchased 4,000 of its common shares at $58 per share and restored these shares to the status of authorized but unissued.

7. December 1, 2020: the company declared a 5% stock dividend for shareholders of record on January 1, 2021. The company was short on cash and therefore could not pay a cash dividend. The company's shares were selling at $57 per share on December 1, 2020.

8. March 15, 2021: the company sold 10000 common shares for $450,000.

9. Dividends: Burlington did not declare any dividends until September 30, 2020. At that date total dividends of $500,000 were declared.

10. The company incurred the following profits (loss) since incorporation: 2019 (25,000) 2020 675,000 2021 400,000.

Required -

a) Determine the amount of dividends received by preferred and common shareholders from the September 30, 2020 declaration.

b) Prepare the journal entries for 2020-21 fiscal years?

c) Prepare the statement of changes in equity and the shareholders' equity section of the balance sheet for September 30, 2021.

Reference no: EM132850674

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