Question 6 (16 Marks) Parts A and Part B below are two independent questions.

Part A (12 marks). Dr. Smith started Biotech Inc. (BTE) on October 1, 2020. On October 1, 2020, BTE issued 100 common shares to Dr. Smith in exchange for $10,000 in cash. Also, the following events occurred in December 2020.

1. On December 1, 2020, BTE borrowed $1,200,000, 5-year loan, bearing 7% interest.
2. On December 10, 2020, BTE issued 1000 preferred Class A shares to investors for $600 each. The articles of incorporation (charter) disclosed that the Class A, non-cumulative preferred shares had a stated value of $ 250 per share.
3. On December 28, 2020, BTE declared and paid a 5% stock dividend on the common shares The market value of the common shares before the announcement of the stock dividend was

$ 250 per share.

4. On December 30, 2020, BTE paid a dividend to the common shareholders of record of $50 per share.

Required:

Please prepare the necessary journal entries for the above transactions above as well as any adjusting entries required at the year-end date December 31, 2020. Narratives are not required.

Date	Account	Debit	Credit
10/1/2020
(Oct.1,2020)
12/1/2020
(Dec.1,2020)
12/10/2020
12/28/2020
12/30/2020
12/31/2020

Question 6. Part B. (4 marks). In addition to common shares outstanding, Essex Corporation has the following preferred shares outstanding at the end of 2020, as indicated below:

Preferred shares	Number of shares	Annual dividends
$25 stated value, 10%, non-cumulative	1000 shares
$100 stated value, 6% cumulative, convertible	2500 shares

Required:

1. Indicate the amount of annual dividend on each issue of the preferred shares by completing the last column of the above table (2 marks).

2. Assume that there are one year of dividends in arrears at the beginning of 2020 and Essex declared total dividends of $40,000 in 2020. What is the amount of dividends that the common shareholders will receive in 2020? (2 marks):

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