Reference no: EM132636686
Question - Simon and Tanya incorporated their company on the 2 July, 2019, calling it Scofield Company Limited. Their Balance Sheet at 31 December 2019 showed the following shareholder's equity:
Ordinary share capital, 61,000 shares issued, fully paid $102,000
Preference share capital ($1.40 per share annual dividend), none issued -
Retained earnings 29,000
Total shareholder's equity $131,000
Required -
1. Were the operations profitable in the first six months? Give your reason.
2. At what price per share did Scofield Limited issue the ordinary shares?
3. During 2020 the company completed the following selected transactions. Record these transactions in the General Journal.
a. Received applications for 2,400 ordinary shares at a total issue price of $5 per share together with application money equivalent to ½ of the issue price of the shares.
b. Issued 2,600 preference shares for cash of $20 per share.
c. Made a call on the partly paid ordinary shares for the balance of the issue price and received the full amount due on the call.
d. Profit for the year was $274,000, and the company declared no dividends. Make the closing entry for the profit.
4. Prepare the shareholder's equity section of the Balance Sheet for Scofield Company Limited as at 31 December, 2020.
5. How much in annual cash dividends will Scofield Company Limited expect to pay to its preference shareholders?