Chapter 6
Corporations: Contributed Capital and Dividends
278
Analysis
Identify where each of the following accounts would be found on the balance sheet. The first
one has been done as an example.
Cash
Current Assets
Common Shares
Dividends Payable
Retained Earnings
Stock Dividends Distributable
AP-16A (
5
9
)
The shareholders’ equity of Genghis Corporation at January 1, 2016 was as follows.
Genghis Corporation
Shareholders’ Equity
As at January 1, 2016
Share Capital
Preferred Shares, $5, non-cumulative, 200,000 authorized,
1,000 issued and outstanding
$225,000
Common Shares, unlimited authorized, 35,000 issued and
outstanding
1,070,000
Total Share Capital
1,295,000
Retained Earnings
253,000
Total Shareholders’ Equity
$1,548,000
No dividend was declared for common shareholders. However on December 15, 2016 the
directors decided to pay dividends to preferred shareholders. The dividend payment date
was December 28, 2016. Net income for the year was $240,000. The company uses the cash
dividends method to record dividends.
Required
a) Calculate the amount of dividend to be paid to preferred shareholders.
