assignmentcafe.com – Accounting/2022

assignmentcafe.com –

The equity section of Living Robotics corporation balance sheet at Dec 31, 2021, is shown below.

Share Capital

Preferred Shares, Cumulative

Authorized – 500 shares

Issued and Outstanding –

300 Shares

$300

Common Shares

Authorized – 100 Shares

Issued and Outstanding –

20 Shares

500

Total Contributed Capital 800

Retained Earnings 192

Total Equity $992

 

Note: There were $30 of dividends in arrears on the preferred shares at Dec 31, 2021.

Required:

a) Calculate the December 31, 2021, book value per share of

i. The preferred shares; and

ii. The common shares.

b) Assume that the common shares were split 2 for 1 on January 2, 2022, and that there

was no change in any other account at that time. Calculate the new book value of

common shares immediately following the share split.

2. DigitalPay Financial Limited was incorporated on January 1, 2020, to offer payments processing

services to small business enterprises.

Required: Prepare journal entries to record the following transactions on January 2,

2020:

a) Received an incorporation charter authorizing the issuance of an unlimited number of

no par-value common shares and 10,000, 4% preferred shares.

b) Issued in exchange for incorporation costs incurred by shareholders 10,000 common

shares at $1.

c) Issued for cash 1,000 preferred shares at $3 each.