Crimson Pottery Corporation is authorized to issue 40,000 shares of $7 convertible preferred shares and 300,000 common shares. On January 1, 2020, the accounts contained the following shareholders’ equity balances.

Crimson Pottery Corporation is authorized to issue 40,000 shares of $7 convertible preferred shares and 300,000 common shares. On January 1, 2020, the accounts contained the following shareholders’ equity balances. CPC follows IFRS. Preferred Shares (10,000 shares issued)       $ 720,000 Common Shares (105,000 shares issued)       1,620,000 Retained Earnings                                               380,000 During 2020, the following transactions occurred: Feb. 1 Issued 1,000 preferred shares for land. The land had a fair market value of $75,000. July 1 Shareholders of 4,000 preferred shares originally purchased at $71 per share converted their shares into common shares. Each preferred share was convertible into five common shares. Market values on July 1 were: preferred shares $73 each and common shares $15 each. Sept. 1 Issued 800 preferred shares for a patent. The asking price of the patent was $62,000. Market values on Sept.1 were: preferred shares $74 each and the patent’s value was not determinable. Dec. 1 Shareholders of 2,000 preferred shares originally purchased at $72 per share converted their shares into common shares. Each preferred share was convertible into five shares common shares. Market values on Dec. 1 were: preferred shares $75 each and common shares $17 each. Dec. 31 Profit for the year was $312,000. No dividends were declared during the year. a)Prepare the journal entries to record the above transactions and the closing entry for   profit. b) Prepare the shareholders’ equity section of the balance sheet at December 31, 2020 c) Calculate the company’s return on equity for 2020.

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