Reference no: EM13342937

Some of the account balances of Vai I,imited at December 31, 2004 are shown below.

$6 Preferred shares (no par, 2,000 shares authorized,
2000 shares issued and outstanding) $520,000
Common shares (no par, 100,000 shares authorized,
50,000 shares issued and outstandingl 500,000
Contributed surplus 103,000
Retained Earnings 774,000
Accumulated Other Comprehensive Income 22,350

The price of the company's common shares has been increasing steadily on the market; it was $21 on January 1, 2005, advanced to $24 by July 1, and to $27 at the end of the year 2005. The preferred shares are not openly traded but were appraised at $120 per share during 2005.Vai had net income of $154,000 during 2005

Instructions

1. Give the proper journal entries for each of the following.

(a) The company declared a property dividend on April 1. Each common shareholder was to receive one share of Waterloo Corp. for every 10 shares outstanding. Vai had 8,000 shares of Waterloo (2% of total outstanding shares), which was purchased in 2003 for $68,400. The shares were held for sale. The Accumulated Other Comprehensive Income relates solely to these shares. The market value of Waterloo shares was $16 per share on April 1.The property dividend was distributed April21 when the market value of Waterloo shares was $18.50. The Waterloo shares stayed at a market value of $18.50 until year end.

(b) On July 1, the company declared a 5% stock dividend to the remaining common shareholders. The dividend was distributed July22.

(c) A shareholder, in an effort to persuade Vai to expand into that city, donated to the company a plot of land with an appraised value of $42,000.

2. Prepare shareholder's equity section of Vai's Balance Sheet as on Dec31