Question

The shareholders' equity section of the statement of financial position of Dolce Corporation as at December...

The shareholders' equity section of the statement of financial position of Dolce Corporation as at December 31, 2020, is given below:

Shareholders' equity:                                                                                                                                              

Preferred shares, $9 non-cumulative, unlimited authorized, 200,000 shares issued and

$ 5,000,000 outstanding

Common shares, unlimited authorized, par value $30, 250,000 shares issued and

7,500,000 outstanding

Retained earnings                                                                                                                                                        4,500,000

Total shareholders' equity                                                                                                                                    $17,000,000

The board of directors for Dolce Corporation feels it is important that its shares trade at or below $50 per share in order to attract the maximum number of investors. The market price is currently $150 per share.

Required

  1. What would you recommend to the board of directors in order to maintain the share price at $50 per share?

  1. What would be the expected market price per share based on your recommendation in part “a” above?

  1. Prepare the journal entry for your recommendation.
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