Question

The following items were shown on the balance sheet of McKean Corporation on December 31,2014: Shareholders...

The following items were shown on the balance sheet of McKean Corporation on December 31,2014:

Shareholders equity

Share Capital

Common shares, no per value, unlimited and number of shares …………………………………$15000000

Authorized; shares issued ……………………………………………………………………………………………180000

$3 preferred shares, redeemable at $130 cumulative

20,000 shares authorized,9000 shares issued ………………………………………………………………1680000

Total share capital…………………………………………………………………………………………………………..600000

Retained Earnings

Total shareholder’s equity……………………………………………………………………………………..2280000

Instructions:

  1. The number of common shares issued was
  2. The preferred shares divided was $            per share
  3. It would cost the company $          to redeem 1000 preferred shares
  4. The average issue price of the preferred share was $
  5. The total amount of cash and other assets paid to McKean Corporation in exchange for share capital, at December 31,2014 was $
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Answer #1

Part A

The number of common shares issued was = 300000 shares (1500000/5)

Part B

The preferred shares divided was = $3 per share

Part C

It would cost the company $130,000 ($130 per share x 1000 shares) to redeem 1000 preferred shares

Part D

The average issue price of the preferred share was = $20 (180000/9000)

Part E

The total amount of cash and other assets paid to McKean Corporation in exchange for share capital, at December 31,2014 was $1680000 (1500000+180000)

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