Question

Context Corporation reports the following components of shareholders’ equity on December 31, 2015.       Share Capital—Ordinary,...

Context Corporation reports the following components of shareholders’ equity on December 31, 2015.

  

   Share Capital—Ordinary, $25 par value, 100,000 shares authorized,    40,000 shares issued and outstanding

 $ 1,000,000  
   Share Premium—Ordinary 70,000  
   Retained earnings 430,000  
   Total shareholders' equity $ 1,500,000  


In year 2016, the following transactions affected its shareholders’ equity accounts.
Jan. 1 Purchased 4,000 of its own shares at $15 cash per share.
Jan. 5

Directors declared a $2 per share cash dividend payable on February 28 to the February 5 shareholders of record.
Feb. 28 Paid the dividend declared on January 5.
July 6 Sold 1,500 of its treasury shares at $19 cash per share.
Aug. 22 Sold 2,500 of its treasury shares at $12 cash per share.
Sept. 5

Directors declared a $2 per share cash dividend payable on October 28 to the September 25 shareholders of record.
Oct. 28 Paid the dividend declared on September 5.
Dec. 31

Closed the $408,000 credit balance (from net profit) in the Income Summary account to Retained Earnings.

2.

Prepare a statement of changes in equity for the year ended December 31, 2016. (Amounts to be deducted should be indicated by a minus sign. Omit the "$" sign in your response.)

CONTEXT CORPORATION
Statement of Changes in Equity
For Year Ended December 31, 2016
  $ Share
Capital		 Share
Premium		 Retained
Earnings		 Total
Equity
Business   Accounting   
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Answer #1
CONTEXT CORPORATION
Statement of Changes in Equity
For Year Ended December 31,2016
Share capital Share premium Retained earning Total equity
Beginning balance 1000000 70000 430000 1500000
Purchase (4000*15) (60000) (60000)
Declared dividend (40000-4000)*2 (72000) (72000)
Paid dividend -
Sold (1500*15)= 22500 (1500*4)= 6000 28500
Sold (2500*15)= 37500 (6000) (1500) 30000
Declared dividend (40000-4000+1500+2500)*2 (80000) (80000)
Paid dividend -
Income summary 408000 408000
Ending balance 1000000 70000 684500 1754500
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