Reference no: EM132464059
Brewster's was incorporated on October 1, 2020. The articles of incorporation indicated the company was authorized to issue 800,000 shares of no par value common shares and 300,000, $3 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.
Point 1. 60,000 common shares issued for cash on October 1, 2020, at $80 per share.
Point 2. 20,000 $3 preferred shares were issued on October 1, 2020 at $100 per share.
Point 3. 10,000 common shares exchanged on Dec 15, 2020, for land in the downtown core. The land had originally cost the seller $400,000 and had an estimated fair value of $650,000 on Dec 15, 2020 when Burlington's share were selling for $78.
Point 4. 10,000 common shares issued on June 1, 2021; the shares had been subscribed for $75 per share on October 31, 2020.
Point 5. October 1, 2022: subscriptions were received for 8,000 common shares at $82 per share. The first installment of $200,000 was received on this date and the final installment was paid on September 30, 2023.
Point 6. November 1, 2022, the company purchased 4,000 of its common shares at $78 per share and restored these shares to the status of authorized but unissued.
Point 7. December 1, 2022: the company declared a 5% stock dividend for shareholders of record on January 1, 2023. The company was short on cash and therefore could not pay a cash dividend. The company's shares were selling at $77 per share on December 1, 2023.
Point 8. March 15, 2023: the company sold 10000 common shares for $650,000.
Point 9. Dividends: Burlington did not declare any dividends until September 30, 2023. At that date total dividends of $700,000 were declared.
Point 10. The company incurred the following profits (loss) since incorporation:
2021 (20,000)
2022 650,000
2023 900,000
Question a) Determine the amount of dividends received by preferred and common shareholders from the September 30, 2023 declaration.
Question b) Prepare the journal entries for 2022-23 fiscal year.
Question c) Prepare the statement of changes in equity and the shareholders' equity section of the balance sheet for September 30, 2023.