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Question

Sonoma Lakes Ltd. (SLL) has the following authorized share capital:

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Unlimited        Common voting shares

500,000          Class A, $5 cumulative preferred shares

500,000          Class B, $10 non-cumulative preferred shares


During 2011, SLL had the following share transactions for cash:


Jan. 1       Issued 50,000 common shares for $100,000.

Mar. 12     Issued 1,000 Class A preferred shares for $60,000.

Apr. 30     Issued 20,000 common shares for $2.50 per share.

Jun. 20     Issued 3,000 Class B preferred shares for $70 per share.

July 2        Reacquired 10,000 common shares for $3 per share.


SLL did not declare any dividends during 2011. On December 31, 2012 a dividend of $3 per share was declared on preferred shares issued.


Instructions

(a)       Journalize the share transactions.

(b)       Calculate the number of common shares issued at December 31, 2011 and the average cost per common share.

(c)       Calculate the amount of the December 31, 2012 total dividend declared and the amount of dividends in arrears after declaring the December 31, 2012 dividend.

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