Reference no: EM132460623
Sage Ltd. showed the following information on its September 30, 2021 year-end financial statements:
- Preferred Shares, $8 cumulative, 500,000 shares authorized,
- 214,000 shares issued and outstanding$3,424,000Common Shares, no par value, unlimited shares authorized,
- 559,000 shares issued and outstanding$5,590,000
The following transactions occurred, in the order given, during 2022:
(a)October 10, 2021: Received subscriptions and down payments for 81,000 common shares at $11 per share. The subscription contracts calls for 40% of the subscription to be paid upon receipt, and the remaining 60% to be paid on November 30, 2021. In the event of default on the subscriptions, the company will retain the down payment.
(b)November 30, 2021: Received payment for 76,400 of the subscribed shares; the remaining 4,600 defaulted. Issued the share certificates for the appropriate number of shares.
(c)January 1, 2022: Issued 9,100 preferred shares at $40 per share.
(d)April 5, 2022: Repurchased and cancelled 20,400 common shares at a cost of $9 per share.
(e)August 15, 2022: Declared dividends for preferred shares (dividends had not been paid the previous year). Also declared $3 per share dividend for common shares. Both dividends are to be paid on October 1 to shareholders of record on September 30, 2022.
(f) If the preferred shares had a $27 par value, what journal entry would be required for the January 1, 2022 transaction in part (c)?
Question 1: Prepare the journal entries to record the above transactions for Sage Ltd. for 2022.