Reference no: EM132918305
Question - Spotnika, Ltd., reported the following on its balance sheet as at December 31, 20X8:
$1.50 Preferred shares, 48,000 shares outstanding $ 1,200,000
Common shares, 112,500 shares issued and outstanding 3,375,000
Contributed surplus on repurchase of common shares 55,800
Retained earnings 2,580,000
Additional Information - The following information for 2019 is given below:
1. There were 7,500 call options outstanding on January 1. The holder of each option was entitled to purchase two common shares at $40 each. On that date, 30% of the option holders exercised their right and purchased the shares from the company.
2. On February 1, the company issued 7,000 common shares in exchange for plant and equipment assessed at $289,000.
3. On March 1, it issued common share subscriptions for 16,400 shares to be issued at $41 each. The subscribers were required to pay $21 on application as the first instalment, to be followed by $15 at the second instalment call and $5 at the final instalment call.
4. On April 1, the company purchased 9,000 common shares for $34.00 per share and retired them on the same day.
5. On May 1, the second instalment of $15 on the share subscription was called and payments from all subscribers were received.
6. On July 1, the final instalment was called in. 400 subscribers failed to make the payment. The company issued share certificates to the remaining subscribers. Those subscribers who had failed to pay on July 1 forfeited the amount they paid on the two earlier instalments.
7. The preferred shares were non-cumulative but participate in distributions in excess of a 10% dividend on the common shares. These shares had been issued several years ago when the company was incorporated. Dividends for any given year are determined on the number of shares outstanding at the end of that year. Dividends on preferred shares were last declared in 2015. The company's management wishes to offer a dividend of 14% to its common shareholders in 2019.
REQUIRED - Prepare journal entries, in proper format, to record all transaction effects in items 1 to 6 as listed above.
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