11/19/21, 8:42 AM Assignment Print View

Score: 50/50 Points 100 %

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11/19/21, 8:42 AM Assignment Print View
 
1. Award: 5 out of 5.00 points  

On March 1, 2020, VisionTech Inc.’s board of directors declared a 15% share dividend when the market price per share
was $17.00. On November 15, 2020, the board of directors declared a 4:1 share split. The equity section of the
company’s December 31, 2019, balance sheet showed:
 
     
Common shares; 20,000,000 shares authorized; 4,050,000 shares issued
and outstanding $ 27,720,000
Retained earnings   3,365,000

Required:
1. Prepare a statement of changes in equity for the year ended December 31, 2020, assuming profit earned during the
year was $8,030,000. (Amounts to be deducted should be indicated by a minus sign.)

VISIONTECH INC.
Statement of Changes in Equity
For Year Ended December 31, 2020
Common Retained Total
Shares Earnings Equity
Balance, January 1 $27,720,000  $ 3,365,000  $31,085,000 

Share dividends  10,327,500  (10,327,500)  $ 0

Profit  8,030,000  8,030,000 

Balance, December 31 $38,047,500  $ 1,067,500  $ 39,115,000 

2. Prepare the equity section of the December 31, 2020, balance sheet.

VISIONTECH INC.
Equity Section of Balance Sheet
December 31, 2020
Contributed capital:
$
Common shares, 20,000,000 shares authorized, 18,630,000 shares issued and outstanding  
38,047,500
Retained earnings  1,067,500 

$
Total equity
39,115,000

References

Worksheet Learning Objective: 13-

01 Describe and
account for share
dividends and share
splits.
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11/19/21, 8:42 AM Assignment Print View

On March 1, 2020, VisionTech Inc.’s board of directors declared a 15% share dividend when the market price per share
was $17.00. On November 15, 2020, the board of directors declared a 4:1 share split. The equity section of the
company’s December 31, 2019, balance sheet showed:
 
     
Common shares; 20,000,000 shares authorized; 4,050,000 shares issued
and outstanding $ 27,720,000
Retained earnings   3,365,000

Required:
1. Prepare a statement of changes in equity for the year ended December 31, 2020, assuming profit earned during the
year was $8,030,000. (Amounts to be deducted should be indicated by a minus sign.)

VISIONTECH INC.
Statement of Changes in Equity
For Year Ended December 31, 2020
Common Retained
Total Equity
Shares Earnings
Balance, January 1 $ 27,720,000 $ 3,365,000 $ 31,085,000
Share dividends   10,327,500 (10,327,500)
Profit   8,030,000 8,030,000
Balance, December 31 $ 38,047,500 $ 1,067,500 $ 39,115,000

2. Prepare the equity section of the December 31, 2020, balance sheet.

VISIONTECH INC.
Equity Section of Balance Sheet
December 31, 2020
Contributed capital:
Common shares, 20,000,000 shares authorized, 18,630,000 shares issued and outstanding   $ 38,047,500
Retained earnings   1,067,500
 
Total equity F
$ 39,115,000

 
Explanation:

1. Share dividends: 4,050,000 shares × 15% = 607,500 shares × $17/share = $10,327,500.

2. Common shares: 4,050,000 shares + 607,500 shares = 4,657,500 shares × 4 = 18,630,000 shares after split.

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