Reference no: EM133022331
Question - Culver Corp. reported the following amounts in the shareholders' equity section of its December 31, 2019 SFP:
Preferred shares, $8 dividend (8,000 shares authorized, 1,900 shares issued) $203,300
Common shares (unlimited authorized, 21,000 issued) 504,000
Contributed surplus 71,200
Retained earnings 250,000
Accumulated other comprehensive income 68,000
Total $1,096,500
During 2020, the company had the following transactions that affect shareholders' equity.
1. Paid the annual 2019 $8 per share dividend on preferred shares and a $5 per share dividend on common shares. These dividends had been declared on December 31, 2019.
2. Purchased 4,100 shares of its own outstanding common shares for $37 per share and cancelled them.
3. Issued 1,100 shares of preferred shares at $109 per share (at the beginning of the year).
4. Declared a 5% stock dividend on the outstanding common shares at their fair value when the shares were selling for $40 per share.
5. Issued the stock dividend.
6. Declared the annual 2020 $8 per share dividend on preferred shares and a $4 per share dividend on common shares. These dividends are payable in 2021.
The contributed surplus arose from net excess of proceeds over cost on a previous cancellation of common shares. Total assets at December 31, 2019, were $2,140,000, and total assets at December 31, 2020 were $2,616,000. The company follows IFRS.
Required - Prepare journal entries to record the transactions above.
Prepare the statement of changes in shareholders' equity for the year ended December 31, 2020. Assume 2020 net income was $490,000 and comprehensive income was $494,000.
Calculate the rate of return on common shareholders' equity and the rate of return on total assets for 2020.