Question

Ivanhoe Supply Corporation provided the following schedule detailing the changes in the shareholders’ equity accounts during 2020 and 2021.

2021						2020
		Number of Shares			Amount			Number of Shares		Amount
Common shares, unlimited authorized
Balance, January 1		520,000			$624,000			520,000		$624,000
Issued shares for cash		52,000			34,000					0
Reacquired shares		(26,000	)		(29,909	)				0
Balance, December 31		546,000			628,091			520,000		624,000

Contributed surplus—reacquisition of common shares
Balance, January 1					15,500					15,500
Reacquired common shares					8,300					0
Balance, December 31					23,800					15,500
Retained earnings
Balance, January 1					186,500					198,000
Profit (loss)					23,500					19,500
Common dividends—Cash					(22,000	)				(31,000	)

Balance, December 31 188,000 186,500 Accumulated other comprehensive income     Balance, January 1 53,000 56,00

Other comprehensive income (loss)					18,000					(3,000	)
Balance, December 31					71,000					53,000

Shareholders’ equity, December 31 $910,891 $879,000

Prepare the statement of changes in shareholders’ equity for the year ended December 31, 2021. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

IVANHOE SUPPLY CORPORATION
Statement of Changes in Shareholders’ Equity
choose the accounting period                                                                      December 31, 2021Month ended December 31, 2021Year ended December 31, 2021

Common Shares		Contributed Surplus– Reacquisition of Common Shares		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total

Balance, January 1
Issued shares for cash
Reacquired common shares
Cash dividends
Comprehensive income
Balance, December 31

2. On July 9, 2021, Sandhill Enterprises Inc. discovered it had recorded the $72,000 purchase of land as legal expense on November 8, 2020. The company had reported retained earnings of $550,500 at its previous year end, December 31, 2020.

During 2021, Sandhill had profit of $185,000 and it declared and paid cash dividends of $207,000. Sandhill has a 25% income tax rate.

(a)

Prepare the journal entry to correct the error. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date Jan. 1	Account Titles and Explanation	Debit	Credit

Answer 1

1..IVANHOE SUPPLY CORPORATION
Statement of Changes in Shareholders’ Equity
Year ended December 31, 2021
	Common shares		Contributed Surplus–Reacquisition of common shares)	Retained Earnings	Accumulated Other Comprehensive Income(loss)	Total
	No.	Amt.($)
Balance, January 1	520000	624000	15500	186500	53000	879000
Issued shares for cash	52000	34000				34000
Reacquired common shares	-26000	-29909	8300			-21609
Cash dividends				-22000		-22000
P/(L)/Comprehensive income				23500	18000	41500
Balance, December 31	546000	628091	23800	188000	71000	910891

Account Title & Explanations	Debit	Credit
Land	72000
Retained earnings		72000
(To correct the wrong debit to expense a/c instead of asset a/c)
Retained Earnings	18000
Income tax payable		18000
(72000*25%)
(To record income tax liability on the amt. wrongly debited to the Dec 31, 2020 Income statement)
Income summary	185000
Retained Earnings		185000
(To close income summary of the Yr. ended Dec 31, 2021, to Retained Earnings)
Retained earnings	207000
Cash		207000
(To record decln.& payment of cash dividends)

Answer 2

Prepare the shareholders' equity section of the balance sheet at December 31, 2021.