The All-Well Corporation had equity on December 31, 2019, as follows: Common shares, unlimited shares authorized,

Question

The All-Well Corporation had equity on December 31, 2019, as follows: Common shares, unlimited shares authorized, 25,000 shares issued $125,000 Retained earnings 150,000 All-Well Corporation is authorized to issue 50,000 shares of $2 cumulative preferred shares. The following transactions occurred during 2020: Jan. 10 Issued 10,000 common shares in exchange for land valued at $60,000. Feb. 15 The board of directors declared a 5% share dividend to shareholders of record on March 1, to be distributed on March 20. The shares were selling for $6 a share. Mar. 20 Issued the share dividend. Apr. 1 Issued 10,000 preferred shares for cash at $11 per share. May 1 Declared total cash dividends of $62,000 to shareholders of record on May 20, payable May 31. May 31 Paid the cash dividend. June 15 The board decided to split the common shares 4 for 1 effective July 1. July 1 Share split (4 for 1) executed. Dec. 31 Earned a net income of $250,000 for the year. Closed the income summary account.

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1) Date Account Titles and Explanation Debit Credit Jan.10 Land $ 60,000.00 Common stock $ 60,000.00 Feb.15 Retained Earnings =(25000+10000)x 5% x $6 $ 10,500.00 Common stock dividend Distributable $ 10,500.00 Mar.20 Common stock dividend Distributable $ 10,500.00 Common stock $ 10,500.00 Apr. 1 Cash (10000 x $11) $ 110,000.00 Preferred Stock $ 110,000.00 May.1 Retained Earnings $ 62,000.00 Common Stock Dividend Payable (balancing) $ 42,000.00 Preferred Stock Dividend Payable (10000 x 2) $ 20,000.00 May.31 Common Stock Dividend Payable $ 42,000.00 Preferred Stock Dividend Payable $ 20,000.00 Cash 15-Jun No entry 1-Jul No entry 31-Dec Income Summary $ 250,000.00 Retained Earnings $ 250,000.00 2) Statement of Changes in Equity Preferred Stock Common stock Retained Earnings Total Balance $125,000 $150,000 $275,000 Issued Common Stock $60,000 $60,000 Stock Dividend $10,500 -$10,500 $0 Issued Preferred Stock $110,000 $110,000 Dividend Paid -$62,000 -$62,000 Net Income $250,000 $250,000 Total $110,000 $195,500 $327,500 $633,000 3) All- Well Corporation Balance Sheet Dec. 31,2020 Shareholder equity Preferred Stock $110,000 Common stock $195,500 Retained Earnings $327,500 Total $633,000

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The All-Well Corporation had equity on December 31, 2019, as follows: Common shares, unlimited shares authorized, 25,000 shares issued $125,000 Retained earnings 150,000 All-Well Corporation is authorized to issue 50,000 shares of $2 cumulative preferred shares

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Archived Solution

1)
Date	Account Titles and Explanation	Debit	Credit
Jan.10	Land	$ 60,000.00
	Common stock		$ 60,000.00

Feb.15	Retained Earnings =(25000+10000)x 5% x $6	$ 10,500.00
	Common stock dividend Distributable	$ 10,500.00

Mar.20	Common stock dividend Distributable	$ 10,500.00
	Common stock		$ 10,500.00

Apr. 1	Cash (10000 x $11)	$ 110,000.00
	Preferred Stock		$ 110,000.00

May.1	Retained Earnings	$ 62,000.00
	Common Stock Dividend Payable (balancing)	$ 42,000.00
	Preferred Stock Dividend Payable (10000 x 2)	$ 20,000.00

May.31	Common Stock Dividend Payable	$ 42,000.00
	Preferred Stock Dividend Payable	$ 20,000.00
	Cash

15-Jun	No entry

1-Jul	No entry

31-Dec	Income Summary	$ 250,000.00
	Retained Earnings		$ 250,000.00

2)	Statement of Changes in Equity
	Preferred Stock	Common stock	Retained Earnings	Total
Balance		$125,000	$150,000	$275,000
Issued Common Stock		$60,000		$60,000
Stock Dividend		$10,500	-$10,500	$0
Issued Preferred Stock	$110,000			$110,000
Dividend Paid			-$62,000	-$62,000
Net Income			$250,000	$250,000
Total	$110,000	$195,500	$327,500	$633,000

3)	All- Well Corporation
	Balance Sheet
	Dec. 31,2020
	Shareholder equity
	Preferred Stock	$110,000
	Common stock	$195,500
	Retained Earnings	$327,500
	Total	$633,000