Reference no: EM132591766

Petra Corporation's, widely held, public company. Information about its shareholders equity is as follows:

Petra Co.

Shareholders' equity

December 31, 2019

Preferred shares, no par value, 8% cumulative, 1,000 issued and outstanding               $100,000

Common shares, 100,000 authorized, 12,000 issued and outstanding                           $180,000

Contributed Surplus-common shares                                                                         $6,000

Contributed Surplus-Preferred shares                                                                       $50,000

Retained earnings                                                                                                 $40,000

Instructions:

Question 1- Prepare all journal entries for the following transaction (assuming all occurred during 2020):

A) Jan 7, Issued 3,500 common shares at $19 per share for cash

B) Feb 12, Issued 1,000 preferred shares 8% cumulative at $150 each

C) May 8, bought and cancelled 1000 common shares at $25 per share

D) June 6 Issued 1,500 common shares at $22 per share for cash

E) June 20, bought and cancelled 2,000 common share at $40 per share

Question 2- After the above transactions, in July 1, 2020 Petra co. declare $50,000 dividend for the date of record Aug 24, 2020 to be paid on Oct 10, 2020.

Determine how much each class of shares should receive dividend and prepare the Journal entry(s) to record this dividend. (Hint: that there is no dividend in arrears. Also, show the amount dividend for common and preferred shares)