On January 1, 2014, Grieve Grocers Inc

question 73

Essay

On January 1, 2014, Grieve Grocers Inc.'s retained earnings account had a deficit (negative) balance of $75,000. During the year ended December 31, 2014, the company's second year of operations, Grieve had the following events which occurred in the sequence listed:
1. Declared and distributed a 10% stock dividend on common shares. Prior to the dividend, Grieve had 60,000 common shares issued with a total cost of $160,000, and the market value of the shares was $6.50 each.
2. Approved at two-for-one stock split.
3. Declared a cash dividend in the amount of $1 per share which is payable 15 days after the company's year end.
4. Profit for the year before taxes was $712,000.
5. Corrected the calculation of the prior year's cost of goods sold, which had been reported as $875,000 but which should have been $900,000, and adjusted the resulting tax savings.
6. Incurred an Other Comprehensive Loss of $174,500 (before income taxes).
Instructions
Prepare Grieve's statement of changes in shareholders' equity for the year ended December 31, 2014 assuming that Grieve has an income tax rate of 25%.

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Definitions:

Certified Cheque

A means of transferring funds by cheque where payment is, in effect, guaranteed by the bank.

Legal Tender

Officially recognized currency that can be used to settle debts, public charges, taxes, and dues.

Warranty Breach

Occurs when a product fails to meet the standards or conditions promised by a warranty, leading to potential legal redress.

Condition Subsequent

A condition in a contract that, when fulfilled, terminates an existing obligation under the contract.