Chapter 6
Corporations: Contributed Capital and Dividends
281
b) Calculate the ending balance of retained earnings for the year ended December 31, 2016.
c) Prepare the shareholders’ equity section of the balance sheet as at December 31, 2016.
AP-18A (
3
4
5
9
)
In 2016, Joanna and some of her friends invested money to start a company named BUDZ
Corporation. The following transactions occurred during 2016.
Jan 1 The corporate charter authorized 76,000, $4 cumulative preferred shares and un-
limited common shares up to a maximum amount of $22,000,000 to be issued.
Jan 6 Issued 231,000 common shares at $15 per share. Shares were issued to Joanna and
other investors.
Jan 7 Issued another 450 common shares to Joanna in exchange for her legal services in
setting up the corporation. The shareholders agreed that the legal services were
worth $7,650.
Jan 12 Issued 3,900 preferred shares for $321,000.
Jan 14 Issued 10,000 common shares in exchange for a building acquired. For this pur-
pose shares were valued at $19.
Nov 15 The first annual dividend on preferred shares was declared.
Dec 20 Paid the dividends declared on preferred shares.
