Chapter 7
Corporations: The Financial Statements
376
On October 1, 2017, Kruma issued an additional 20,000 common shares for $100,000. There
was no other change in the number of common or preferred shares. Kruma paid $120,000
dividends to preferred shareholders, but no dividend to common shareholders in 2017. The
preferred shares are not convertible. The company does not have any outstanding securities
that can be converted into common shares.
Required
a) Record the journal entry to correct the mistake related to the understatement of interest
receivable and interest revenue in 2016.
Date
Account Title and Explanation
Debit
Credit
b) Prepare an income statement under ASPE for Kruma for the year ended December 31,
2017.
