Intermediate Accounting Vol 2 Canadian 3Rd Edition Lo Solutions Manual Full Chapter PDF

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Chapter 13
Equities
M. Problems
P13-1. Suggested solution:
Explanation
Statement T/F (not part of required)
a. Common (ordinary) shares have F Common shares have a residual claim
priority over preferred shares. therefore a lower priority then preferred
shares.
b. A share with cumulative dividends T Common shares cannot have cumulative
must be a preferred share. dividends; therefore, any share that has
cumulative dividends must be preferred.
c. Investors favour purchasing F “Preferred shares” refers to priority in
preferred shares. liquidation, not investor preferences.
d. Common shares always have F Common shares have a residual claim.
voting rights. They may or may not have voting rights.
Copyright © 2017 Pearson Canada Inc.

13-1
ISM for Lo/Fisher, Intermediate Accounting, Vol. 2, Third Canadian Edition
Explanation
Statement T/F (not part of required)
a. The number of shares issued > F The correct order is: number authorized 
number outstanding >number number issued  number outstanding.
authorized.
b. A share with a fixed dividend rate F The value of preferred can be higher or
(i.e., a preferred share) is more lower than that of common shares.
valuable than one without.
c. All issued shares are eligible to F Shares can be issued but held in treasury
vote for the board of directors. and these shares do not have voting rights.
d. All outstanding shares are eligible F Some shares do not have voting rights.
to vote for the board of directors.

13-2
Chapter 13: Equities
The “par value” label can be misleading to some investors who confuse the idea of par value
with the par value for a bond. For example, a bond with $1,000 par value is worth $1,000 at
maturity. An investor may wrongly assume that par value of a common stock suggests the share
will be worth at least its par value. In fact, there is no such guarantee for common shares; a
common share is worth what another person will pay, which has no connection with the share’s
par value. In a worst-case situation, the value of the share may become worthless in the event of
bankruptcy. To protect naive investors from making an incorrect association between par value
and the value of a common share, par value common shares are generally not issued.
a. The cumulative dividend feature means that common shareholders cannot receive any
dividends until the company pays all current and missed dividends to the preferred
shareholders. Only after all dividends to preferred shareholders have been paid can common
shareholders receive any dividends.
b. Preferred shares generally have this feature as the payment of dividends is not a legal
obligation. Further, preferred shareholders (generally) do not have a voice on the board of
directors to protect their interest. Were there no cumulative feature and protection, then when
dividends were later paid, preferred shareholders could only enforce that year’s prescribed
dividend before dividends are paid to common shareholders. By having a cumulative feature
it protects preferred shareholders from being overlooked to the advantage of common
shareholders when it comes to dividends.
c. Common shares cannot have a cumulative feature because such shares do not have a fixed
dividend rate. In any period, zero dividends are as valid as any other rate. Another way to
look at it is that a cumulative feature would be redundant: since common shares have a
residual interest in the entity, any cash retained and not paid out to common shareholders in
one period remains the property of the company and therefore becomes part of the residual
claim held by common shareholders.
a. Residual interest means “what is left over,” so common shareholders are entitled to whatever
remains after paying liabilities and preferred shareholders. While this can be bad should the
company run into difficulty, it also means that common shareholders have unlimited upside
potential should the company perform well. Creditors and preferred shareholders do not
enjoy this upside potential.

13-3
b.
Debt-like qualities of preferred shares Equity-like qualities of preferred shares
Has a specified dividend rate. Dividends are paid at the discretion of the
board of directors.
Is not entitled to the residual interest in the Cannot force company into bankruptcy for
company. failure to declare dividends.
Usually does not include a vote for the Defined as equity by the CBCA.
board of directors.
Has priority over common shares. Has lower priority than creditors,
employees, suppliers, and government.
Market price significantly depends on Usually does not have a specific maturity
market yields on similar financial date.
investments.
c. There are several reasons why management would want to use preferred shares. First,
preferred shares do not dilute common shareholders’ voting interest and residual economic
interest in the company. Second, as a component of equity, issuing preferred shares lowers
leverage ratios. Third, the lower leverage from using preferred shares increases the
opportunity to issue additional debt. Fourth, preferred shareholders cannot force the company
into bankruptcy, so using this type of financing does not increase the risk of bankruptcy,
whereas issuing debt would increase this risk.
a. The rules and procedures of accounting for equity are set at the national level as each country
has its unique and particular legal provisions for how corporations are set up. Accounting
procedures must respect and comply with the legal regulations surrounding how companies
are incorporated and the precise requirements and constraints related to share capital
reporting and recording.
b. There are IFRS for most other balance sheet accounts. Further, equity is defined as the
residual of assets less liabilities. Therefore, the total amount of equity should be materially
the same for all jurisdictions. Financial statement users are less interested in the precise
accounting recording of amounts within share equity, and more interested in the recording
and reporting of assets, liabilities, and determination of earnings. Users are very interested in
the legal details and specifics of share equity accounts, and at that level it is the obligation of
the national accounting standard setters and security market regulators to define the precise
accounting standards to suit local conditions.
For accounting purposes, the distinguishing characteristic of a common share is that it has a
residual claim to the company’s earnings and assets, whereas preferred shares have a maximum
claim normally specified by the shares’ dividend rate.
Common shares for companies incorporated under the Canada Business Corporations Act do not
have par value. Common shares also normally have voting rights, but not all common shares do.

13-4
It is true that common shares cannot have cumulative dividends; however, many preferred shares
also do not have cumulative dividends. Finally, whether a share is issued or outstanding is an
irrelevant consideration for classifying a share as common or preferred.
The separation is necessary to distinguish the results of transactions with owners from those
resulting from transactions with non-owners. Transactions with owners include contribution
from owners (share issuances), distribution to owners (dividends), and repurchases from owners.
Transactions with other parties include all the operating activities (sales, production) as well as
investing activities (purchasing equipment) and debt financing. Generally, the distinction helps
to separate returns on capital (i.e., profit) from amounts contributed by owners.
Account Equity section Asset or liability

Preferred shares 
Investment in Company A common shares 
Treasury shares 
Accumulated other comprehensive income 
Bonds payable 
Donated assets 
Appropriated reserves 
Provision for warranties 
Not contributed
Account Contributed capital capital
Common shares 
Retained earnings 
Preferred shares 
Accumulated other comprehensive income 
Appropriated reserves 
Equity in associate 
Contributed surplus—common shares 
Treasury shares 

13-5
Has potential to
directly affect No direct effect on
Account retained earnings retained earnings
Declaration of a cash dividend 
Issuance of common shares 
Issuance of preferred shares 
Appropriation for a reserve 
Stock split 
Declaration of a stock dividend 
Omission of a cumulative dividend on preferred 
shares
Transaction potentially
affects this account in the
manner indicated
Account (Yes / No)
Debit to share capital Yes
Debit to contributed surplus Yes
Debit to treasury stock Yes
Debit to loss on share retirement No
Debit to retained earnings Yes
Debit to accumulated other comprehensive income (AOCI) No
manner indicated
Account (Yes / No)
Debit to cash No
Debit to retained earnings Yes
Credit to share capital No
Debit to loss on share retirement No
Debit to contributed surplus Yes
Debit to treasury stock No

13-6
manner indicated
Account (Yes / No)
Debit to share capital No
Debit to contributed surplus No
Debit to retained earnings No
Debit to treasury stock Yes
Debit to accumulated other comprehensive income (AOCI) No
Credit to share capital No

a.
Dr. Cash (20,000 sh × $12/sh) 240,000
Dr. Subscriptions receivable [20,000 shares × ($20/sh - 160,000
$12/sh)]
Cr. Common stock subscribed (20,000 sh × $20/sh) 400,000
b.
Dr. Cash (20,000 sh × $8/sh) 160,000
Cr. Subscriptions receivable 160,000
Dr. Common stock subscribed 400,000

Cr. Common stock 400,000
c.
Dr. Common stock subscribed (5,000 sh × $20/sh) 100,000
Cr. Subscriptions receivable [5,000 shares × ($20/sh 40,000
-$12/sh)]
Cr. Cash (5,000 sh × $12/sh) 60,000
d. The subscriptions receivable account would be reported on the balance sheet as a contra-
equity account as the employees are not at risk for a decline in the price of the shares. The
facts of the case do not speak to whether there is a reasonable assurance the company will
collect the full amount of the loan. This is not a critical factor, though, as the lack of
employee risk is sufficient to require that the receivable be deducted from equity.

13-7

a.
Dr. Cash (100,000 sh × $50/sh) 5,000,000
Cr. Common shares 4,038,462
Cr. Preferred shares 961,538
Supporting computations
Common shares $42.00
Preferred shares 10.00
$52.00
Common shares—$5,000,000 × $42 / $52 $4,038,462
Preferred shares—$5,000,000 × $10 / $52 961,538
$5,000,000
b.
Dr. Cash (100,000 sh × $50/sh) 5,000,000
Cr. Common shares (10,000 sh × $42/sh) 4,200,000
Cr. Preferred shares ($5,000,000 - 800,000
$4,200,000)
c.
Dr. Cash (100,000 sh × $50/sh - $20,000) 4,980,000
Dr. Retained earnings 20,000
Cr. Common shares—as calculated in part a 4,038,462
Cr. Preferred shares—as calculated in part a 961,538
January, 2015
Dr. Cash (50,000 sh × $11/sh) 550,000
Dr. Subscriptions receivable [50,000 shares × ($20/sh - 450,000
$11/sh)]
Cr. Common stock subscribed (50,000 sh × $20/sh) 1,000,000
July, 2015
Dr. Cash (40,000 sh × $5/sh) 200,000
Dr. Common stock subscribed (10,000 sh × $20/sh) 200,000

Cr. Contributed Surplus—Type C 110,000
(10,000 sh × $11/sh)
Cr. Subscriptions receivable [10,000 shares × 90,000
($20/sh -$11/sh)]

13-8
December 2015
Dr. Cash (35,000 sh × $4/sh) 140,000
Dr. Common stock subscribed (5,000 sh × ($20/sh) 100,000

Cr. Contributed Surplus—Type C [5,000 sh × 80,000
$11/sh + $5/sh)]
Cr. Subscriptions receivable [5,000 shares × ($20/sh 20,000
-$11/sh - $5/sh)]
Dr. Common stock subscribed 700,000

Cr. Common stock 700,000

a.
Dr. Cash (200,000 sh × $100/sh - $25,000) 19,975,000
Cr. Class A preferred shares 6,862,745
Cr. Class B preferred shares 1,372,549
Common shares $ 60.00
Class A preferred shares 35.00
Class B preferred shares 7.00
$102.00
Common shares—$20,000,000 × $60 / $102 $11,764,706
Class A preferred shares—$20,000,000 × $35 / $102 6,862,745
Class B preferred shares —$20,000,000 × $7 / $102 1,372,549
$20,000,000
b.
Dr. Cash (200,000 sh × $100/sh - $25,000) 19,975,000
Cr. Class A preferred shares 6,854,167
Cr. Class B preferred shares 1,370,833
Common shares $ 60.00
Class A preferred shares 35.00
Class B preferred shares 7.00
$102.00
Common shares—$19,975,000 × $60 / $102 $11,750,000
Class A preferred shares—$19,975,000 × $35 / $102 6,854,167
Class B preferred shares —$19,975,000 × $7 / $102 1,370,833
$19,975,000
13-9
c.
Dr. Cash (200,000 sh × $100/sh - $25,000) 19,975,000
Cr. Common shares (200,000 sh × $60/sh) 12,000,000
Cr. Class A preferred shares (200,000 sh × $35/sh) 7,000,000
Cr. Class B preferred shares ($20,000,000 - 1,000,000
$12,000,000 - $7,000,000)
a. Journal entries:
Mar. 1 Dr. Cash (500 sh × $40/sh) 20,000
Cr. Treasury shares ($90,000 / 3,000 sh = $30/sh; 15,000
500 sh × $30/sh = 15,000)
Cr. Contributed surplus on repurchases and resales 5,000
(Type B) ($20,000 - $15,000 = $5,000)
May 15 Dr. Cash (5,000 sh × $25/sh) 125,000

Cr. Common shares 125,000
Dec. 15 Dr. Retained earnings 170,000

Cr. Dividends payable (42,500 sh × $4/sh) 170,000
(#shares o/s = 40,000 + 5,000 – 3,000 + 500 =
42,500)
Dec. 31 Dr. Income summary 200,000

Cr. Retained earnings 200,000
This is the closing entry to close the income statement
accounts.
b. Shareholders’ equity section of Utopia’s balance sheet:

Utopia Is A Destination Inc.
Balance sheet excerpt (shareholders’ equity)
As at December 31, 2016
Common stock, no par, 60,000 authorized, 45,000 issued $925,000^

Contributed surplus on repurchases and resales 25,000*
Treasury shares, 2,500 shares (75,000)†
Retained earnings 430,000‡
Total shareholders’ equity $1,305,000
^
40,000 + 5,000 = 45,000;
$800,000 + $125,000 = $925,000.
*
$20,000 + $5,000 = $25,000.
†
3,000 – 500 = 2,500 shares;
$90,000 – $15,000 = $75,000.
‡
$400,000 – $170,000 + $200,000 = $430,000
13-10
Capital transactions involve exchanges with owners of the firm. Transactions involving the
issuance and repurchase of shares can result in economic gains or losses for those investors who
buy or sell the company’s shares and those investors do recognize accounting gains or losses.
However, it would be counterproductive for the company that issued the shares to also recognize
gains or losses, for two reasons. First, the company would record a “gain” when the share price
declines, so the “gain” does not correspond to the underlying economic events. Second, allowing
the recognition of gains in particular would create a moral hazard in which management is
motivated to buy and sell shares to investors opportunistically to inflate profits. The profit
motive would also influence if and when management would release important information to
investors.

a.
Jan. 1, Dr. Cash 100,000,000
2012 Cr. Common shares 100,000,000
(10,000,000 sh × $10/sh)
Jan. 1, Dr. Common shares (100,000 sh × $10/sh) 1,000,000

2018 Cr. Cash (100,000 sh × $8/sh) 800,000
Cr. Contributed surplus 200,000
b. The credit (to contributed surplus) reflects poor management. The company issued the shares
at $10/share in 2007; six years later, the price has fallen to $8 without any dividends in the
intervening period. Shareholders would have been better off to “stuff their money under a
mattress” or to put it safely in a bank account. Consequently, shareholders should be unhappy
about the credit to contributed surplus.
c. Journal entry if repurchase price were to be $30/sh:

Jan. 1, Dr. Common shares (100,000 sh × $10/sh) 1,000,000
2013 Dr. Retained earnings 2,000,000
Cr. Cash (100,000 sh × $30/sh) 3,000,000
d. The $2,000,000 is charged against retained earnings because the company has no contributed
surplus to use up. Contributed surplus cannot go into a debit balance; if it were to be in a
debit position, it would have to be called “contributed deficit,” which defies definition
because one cannot contribute a negative amount. The debit is not an expense or loss as this
is a capital transaction.
A shareholder should be happy despite the decline in retained earnings from this repurchase
because the share price has increased 200% from $10 to $30 per share.

13-11
Note that the common shares have a per share value on the books at $30,000,000 / 2,500,000 sh
= $12/sh.
Jan. 15 Dr. Common shares (100,000 sh × $12/sh) 1,200,000

Cr. Contributed surplus – from repurchases (Type B) 200,000
Cr. Cash (100,000 sh × $10/sh) 1,000,000
Aug. 20 Dr. Common shares (300,000 sh × $12/sh) 3,600,000

Dr. Contributed surplus – from repurchases (Type B) 650,000
(use entire balance in account $450,000 + 200,000)
Dr. Retained earnings (remainder) 250,000
Cr. Cash (300,000 sh × $15/sh) 4,500,000

Single transaction method:
Repurch. Dr. Treasury shares 600,000

Cr. Cash (20,000 sh × $30/sh) 600,000
Resale 1 Dr. Cash (10,000 sh × $35/sh) 350,000

Cr. Contributed surplus – from repurchases and 50,000
resales (Type B)
Cr. Treasury shares (10,000 sh × $30/sh) 300,000
Resale 2 Dr. Cash (10,000 sh × $28/sh) 280,000

Dr. Contributed surplus – from repurchases and resales 20,000
(Type B)
Cr. Treasury shares (10,000 sh × $30/sh) 300,000

13-12
Two-transaction method:
Note that the balance in the common share account of $5,000,000 for 200,000 shares equals
$25/sh. In the two-transaction method, the repurchase is the second part of a sell/buy cycle, and
the later sales are the beginning of a new sell/buy cycle.
Repurch. Dr. Common shares (20,000 sh × $25/sh) 500,000

Cr. Cash (20,000 sh × $30/sh) 600,000
Sale 1 Dr. Cash (10,000 sh × $35/sh) 350,000

Sale 2 Dr. Cash (10,000 sh × $28/sh) 280,000

a. Journal entries:
May. 1 Dr. Cash (800 sh × $48/sh) 38,400
Cr. Treasury shares ($165,000 / 5,000 sh = $33/sh; 26,400
800 sh × $33/sh = 26,400)
Cr. Contributed surplus on repurchases and resales 12,000
(Type B) ($38,400 - $26,400 = $12,000)

Cr. Dividends payable (25,800 sh × $2/sh) 51,600
(#shares o/s = 30,000 – 5,000 + 800 = 25,800)
Dec. 31 Dr. Income summary 120,000

Cr. Retained earnings 120,000
This is the closing entry to close the income statement
accounts.

13-13
b. Shareholders’ equity section of Elgin’s balance sheet:

Elgin Company
Balance sheet excerpt (shareholders’ equity)
As at December 31, 2015
Common stock, no par, 40,000 authorized, 30,000 issued $720,000

Contributed surplus on repurchases and resales 37,000*
Treasury shares, 4,200 shares (138,600)†
Retained earnings 418,400‡
Total shareholders’ equity $1,036,800
* $25,000 + 12,000 = $37,000.
†
5,000 – 800 = 4,200 shares;
$165,000 – $26,400 = $138,600.
‡
$350,000 – $51,600 + $120,000 = $418,400
a. As per Canadian Tire Corporation, Limited’s balance sheet as at December 28, 2013, the
company reported total equity of $5,449.9 million categorized as follows:
Type of equity Balance on Dec. 31, 2013 –
in $millions
Share capital $ 587.0
Contributed surplus 6.2
Accumulated other comprehensive income (loss) 47.4
Retained earnings 4,526.7
Non-controlling interests 282.6
Total equity $5,449.9
b. The categories of share capital reported by Canadian Tire in Note 28 follow:

Type of share capital Balance on Dec. 28, 2013 – in $millions
Common shares $ 0.2
Class A non- voting shares 586.8
Total $587.0

13-14
c. As per Canadian Tire Corporation, Limited’s statement of changes in equity for the year-
ended December 28, 2013, the opening and closing balances of contributed surplus were $2.9
and $6.2 million respectively. The $3.3 million increase ($6.2 - $2.9) for the year was
categorized as follows:
Factor Amount (in
$millions)
Repurchase of Class A share for less than the average issue price $ 0.9
Surplus arising from the sale of the CT REIT* 2.4
Total $3.3
*Canadian Tire Real Estate Investment Trust
d. As per Canadian Tire Corporation, Limited’s statement of changes in equity for the year-
ended December 28, 2013, the opening and closing balances of accumulated other
comprehensive income were $(1.7) million and $47.4 million respectively. The two
categories of AOCI reported were: i) those arising from cash flow hedges; and ii) those
arising from fair value changes in available-for-sale financial assets.

a. Journal entries:
Mar. 1 Dr. Cash (2,000 sh × $90/sh) 180,000
Dr. Contributed surplus on repurchases and resales 20,000
(Type B) ($200,000 - $180,000)
Cr. Treasury shares 200,000
May 20 Dr. Common shares ($4,000,000 / 40,000 sh = $100/sh; 50,000

500 sh × $100/sh = 50,000)
Cr. Cash (500 sh × $95/sh) 47,500
Cr. Contributed surplus on repurchases and 2,500
resales (Type B) ($50,000 - $47,500)

Cr. Dividends payable preferred A (2,000 sh × 8,000
$100/sh × 4%)
Cr. Dividends payable preferred B (1,000 sh × 5,000
$100/sh × 4%)
Cr. Dividends payable common ($600,000 - $8,000 - 587,000
$5,000 = $587,000)
Dec. 31 Dr. Other comprehensive income 50,000

Cr. Accumulated other comprehensive income 50,000
This is the closing entry to close the other
comprehensive income account.
13-15
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Hjalmar Théel, "On a singular Case of Hermaphroditism in
Holothurids," Bih. Svenska Vet. Akad. Hand. xxvii. Af. 4, No. 6,
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[508]
Bronn's Thier-Reich, vol. ii. Abt. 3, Buch i. "Die Seewalzen," 1891,

pp. 327 et seq.
[509]
Genuine suckers appear never to be developed; but the ends of

the ventral podia are sometimes rounded, sometimes slightly
flattened.
[510]
"Mémoire sur l'Elpidia nouveau genre d'Holothuries," K. Sv. Vet.

Akad. xiv. No. 8, 1877.
[511]
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Mus. Comp. Zool. No. 56, 1895, p. 124.
[512]
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Phil. Trans. Roy. Soc. 1866, pp. 671-756.
[513]
"On the Nervous System of Antedon rosaceus," Q.J.M.S. xxiv.

1884, p. 507.
[514]
Bather calls the side-plates "adambulacral." The name is

unfortunate, as it suggests that the side-plates correspond to the
adambulacrals of Asteroidea; but when the groove is closed the
position and function of adambulacrals and covering plates is the
same (Lankester's Treatise on Zoology, iii. "Echinodermata,"
1900).
[515]
Challenger Reports (Stalked Crinoids), vol. xi. pt. xxxii. 1884.
[516]
Stammesgeschichte der Pelmatozoen, pt. i. 1899.
[517]
"Die Echinodermenlarven der Plankton Expedition," Ergebn.

Plankton Exp. Bd. ii. J, 1898.
[518]
"Über die Larvenzustande und die Metamorphose der Ophiuren

und Seeigel," Abh. K. Akad. wiss. Berlin, 1846, and other papers in
the same publication in subsequent years.
[519]
This is clearly seen by comparing the larva of Asterina gibbosa

with a young Bipinnaria in which the longitudinal band is as yet
undivided. The shape of the prae-oral lobe is practically the same
in both.
[520]
"The Fate of the Body-cavities in the Metamorphosis of Asterias

pallida," J. Coll. Japan, x. 1898, p. 239.
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"The Metamorphosis of Echinoderms," Quart. Journ. Micr. Sc.
xxxviii. 1895, p. 45.
[523]
In the type figured (larva of Synapta digitata) the feelers are

budded off directly from the ring-canal and alternate with the
rudiments of the radial canal.
[524]
Observed in Plymouth, 1905.
[525]
"Die Entwicklung der Synapta digitata," Jen. Zeitschr. xxii. 1888, p.

175.
[526]
"Die Cambrische Stammgruppe der Echinodermen," Jen. Zeitschr.

xxx. 1895.
[527]
Lankester's Treatise on Zoology, "Echinodermata," pt. iii. 1900, p.

33.
[528]
Brit. Mus. Cat. "British Echinodermata," 1892, p. 14.

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Intermediate Accounting Vol 2 Canadian 3Rd Edition Lo Solutions Manual Full Chapter PDF

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Solution manual: https://testbankpack.com/p/solution-manual-for-intermediate-accounting-vol-2-

Test bank: https://testbankpack.com/p/test-bank-for-intermediate-accounting-vol-2-canadian-

P13-1. Suggested solution:

Copyright © 2017 Pearson Canada Inc.

P13-2. Suggested solution:

Copyright © 2017 Pearson Canada Inc.

P13-3. Suggested solution:

P13-4. Suggested solution:

P13-5. Suggested solution:

Copyright © 2017 Pearson Canada Inc.

P13-6. Suggested solution:

P13-7. Suggested solution:

Copyright © 2017 Pearson Canada Inc.

P13-8. Suggested solution:

P13-9. Suggested solution:

Account Equity section Asset or liability

P13-10. Suggested solution:

Copyright © 2017 Pearson Canada Inc.

P13-11. Suggested solution:

P13-12. Suggested solution:

P13-13. Suggested solution:

Copyright © 2017 Pearson Canada Inc.

P13-14. Suggested solution:

P13-15. Suggested solution:

Dr. Common stock subscribed 400,000

Copyright © 2017 Pearson Canada Inc.

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P13-17. Suggested solution:

Dr. Common stock subscribed (10,000 sh × $20/sh) 200,000

Copyright © 2017 Pearson Canada Inc.

Dr. Common stock subscribed (5,000 sh × ($20/sh) 100,000

Dr. Common stock subscribed 700,000

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May 15 Dr. Cash (5,000 sh × $25/sh) 125,000

Dec. 15 Dr. Retained earnings 170,000

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b. Shareholders’ equity section of Utopia’s balance sheet:

Common stock, no par, 60,000 authorized, 45,000 issued $925,000^

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Jan. 1, Dr. Common shares (100,000 sh × $10/sh) 1,000,000

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Copyright © 2017 Pearson Canada Inc.

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Jan. 15 Dr. Common shares (100,000 sh × $12/sh) 1,200,000

Aug. 20 Dr. Common shares (300,000 sh × $12/sh) 3,600,000

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Repurch. Dr. Treasury shares 600,000

Resale 1 Dr. Cash (10,000 sh × $35/sh) 350,000

Resale 2 Dr. Cash (10,000 sh × $28/sh) 280,000

Copyright © 2017 Pearson Canada Inc.

P13-24. Suggested solution:

Repurch. Dr. Common shares (20,000 sh × $25/sh) 500,000

Sale 1 Dr. Cash (10,000 sh × $35/sh) 350,000

Sale 2 Dr. Cash (10,000 sh × $28/sh) 280,000

P13-25. Suggested solution:

Dec. 30 Dr. Retained earnings 51,600

Dec. 31 Dr. Income summary 120,000

Copyright © 2017 Pearson Canada Inc.