"ments; P13.12A (LO 2, 3, 4, 5, 6) AP Annora Inc., a private company, is authorized to issue an unlimited num- ber of common shares and 100,000 noncumulative $4 preferred shares. It began operations on January 1, 2021, and the following are selected transactions during 2021: Jan. 1 2 Dec. 1 31 Issued 300,000 common shares for $150,000 cash. Issued 30,000 preferred shares for $40 cash per share. Declared a total of $225,000 in dividends, payable on January 5, to shareholders of record on December 13. Determined that it had total revenues of $915,000 and operating expenses of $610,000. Annora elected to report under ASPE. It has a 15% income tax rate and paid income tax instalments during the year of $40,000. Instructions a. Record the share issue and dividend transactions. b. Prepare a partial income statement starting with profit before income tax and record the adjusting entry for income tax. c. Prepare a statement of retained earnings and the shareholders' equity section of the balance sheet. Taking It Further Why are common shareholders sometimes referred to as "residual owners"?
"ments; P13.12A (LO 2, 3, 4, 5, 6) AP Annora Inc., a private company, is authorized to issue an unlimited num- ber of common shares and 100,000 noncumulative $4 preferred shares. It began operations on January 1, 2021, and the following are selected transactions during 2021: Jan. 1 2 Dec. 1 31 Issued 300,000 common shares for $150,000 cash. Issued 30,000 preferred shares for $40 cash per share. Declared a total of $225,000 in dividends, payable on January 5, to shareholders of record on December 13. Determined that it had total revenues of $915,000 and operating expenses of $610,000. Annora elected to report under ASPE. It has a 15% income tax rate and paid income tax instalments during the year of $40,000. Instructions a. Record the share issue and dividend transactions. b. Prepare a partial income statement starting with profit before income tax and record the adjusting entry for income tax. c. Prepare a statement of retained earnings and the shareholders' equity section of the balance sheet. Taking It Further Why are common shareholders sometimes referred to as "residual owners"?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:stments;
ing ratios.
P13.12A (LO 2, 3, 4, 5, 6) AP Annora Inc., a private company, is authorized to issue an unlimited num-
ber of common shares and 100,000 noncumulative $4 preferred shares. It began operations on January 1,
2021, and the following are selected transactions during 2021:
Jan. 1
2
Dec. 1
31
Issued 300,000 common shares for $150,000 cash.
Issued 30,000 preferred shares for $40 cash per share.
Declared a total of $225,000 in dividends, payable on January 5, to shareholders of record on
December 13.
Determined that it had total revenues of $915,000 and operating expenses of $610,000.
Annora elected to report under ASPE. It has a 15% income tax rate and paid income tax instalments
during the year of $40,000.
Instructions
a. Record the share issue and dividend transactions.
b. Prepare a partial income statement starting with profit before income tax and record the adjusting
entry for income tax.
c. Prepare a statement of retained earnings and the shareholders' equity section of the balance sheet.
Taking It Further Why are common shareholders sometimes referred to as "residual owners"?
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