Reference no: EM132484488

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.

1. 60,000 common shares issued for cash on October 1, 2020, at $80 per share.

2. 20,000 $3 preferred shares were issued on October 1, 2020 at $100 per share.

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.

4. 10,000 common shares issued on June 1, 2021; the shares had been subscribed for $75 per share on October 31, 2020.

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.

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.

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.

8. March 15, 2023: the company sold 10000 common shares for $650,000.

9. Dividends:

Burlington did not declare any dividends until September 30, 2023. At that date total dividends of $700,000 were declared.

10. The company incurred the following profits (loss) since incorporation:

2021 (20,000)

2022 650,000

2023 900,000

Required:

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.