Chapter 6
Corporations: Contributed Capital and Dividends
291
AP-4B (
3
9
)
The shareholders’ equity of Sharp Ltd. at December 31, 2016 is as follows.
Additional Information
• The preferred shares have an average issue price of $55 per share.
• The common shares have an average issue price of $40 per share.
• Retained earnings as at January 1, 2016 was $187,000, net income for the year was
$65,450 and $9,800 of dividends were declared, payable on January 10, 2017
Fill in the grey areas in the table below with the correct numbers.
Sharp Ltd.
Shareholders' Equity
As at December 31, 2016
Share Capital
Preferred shares, $0.50, 5,000 shares authorized, 1,000 shares issued and outstanding
Common shares, 30,000 shares authorized, 6,500 shares issued and outstanding
Total Share Capital
Retained Earnings
Total Shareholders' Equity
Analysis
Some corporations prefer to issue mainly preferred shares to their shareholders instead of
common shares. Discuss reasons that might motivate a corporation to issue mainly preferred
shares instead of common shares.
