The following balances in itsshareholdersâ equity at 1 January:
Contributed equity (450 0000 ordinary shares) $2100 000
Retained earnings 2 225 000
During the year the business had the following transactions
1 Mar. Issued 200 000 ordinary shares for cash at $8 pershare.
1 Jul. Declared a 1 for 10 share dividend, payable 1August. The shares were trading at $7 per share on 1 July.
15 Aug. Declared a $0.50 per share cash dividendof record on 1 September, payable 15 September.
1 Oct. Declared a $0.50 per share cash dividend ofrecord on 1 September, payable 15 September.
31 Dec. Bought back 6000 ordinary shares for $45 000. Calculatedtotal comprehensive income for the year to be $520 000.
Required
a Prepare the journal entries to record thetransactions.
b Prepare the company's 31 December shareholdersâequity section.
c Calculate earnings per share for the year.
The following balances in itsshareholdersâ equity at 1 January:
Contributed equity (450 0000 ordinary shares) $2100 000
Retained earnings 2 225 000
During the year the business had the following transactions
1 Mar. Issued 200 000 ordinary shares for cash at $8 pershare.
1 Jul. Declared a 1 for 10 share dividend, payable 1August. The shares were trading at $7 per share on 1 July.
15 Aug. Declared a $0.50 per share cash dividendof record on 1 September, payable 15 September.
1 Oct. Declared a $0.50 per share cash dividend ofrecord on 1 September, payable 15 September.
31 Dec. Bought back 6000 ordinary shares for $45 000. Calculatedtotal comprehensive income for the year to be $520 000.
Required
a Prepare the journal entries to record thetransactions.
b Prepare the company's 31 December shareholdersâequity section.
c Calculate earnings per share for the year.
Related questions
La Sfera Co. was formed on July 1, 2014. The company reportedthe following summarized statement of financial position at July 1,2017:
RM | |
Assets | |
Cash | 472,000 |
Other assets | 1,680,000 |
Total assets | 2,152,000 |
Liabilities and Equity | |
Liabilities | |
Other liabilities | 546,000 |
Ordinary dividend payable | 35,000 |
Shareholdersâ equity | |
7% preference shares, 300,000 authorised, 50,000 issued | 250,000 |
Ordinary share, 500,000 authorised, 250,000 issued | 750,000 |
Retained earnings | 571,000 |
Total liabilities and equity | 2,152,000 |
The following transactions occurred during the financial yearbut have not been recorded:
July 1, 2016 | Paid dividends payable to shareholders. |
Aug 15, 2016 | Issued 50,000 ordinary shares to the public for RM5 per share.The company incurred RM4, 000 on the costs of issuance ofshares. |
Nov 23, 2016 | Offered right issue to existing shareholders, with the right topurchase one shares for every 80 shares held. Market price on thedate was RM5. All offers were taken up. |
Feb 1, 2017 | Obtained a 6-month loan amounting RM 25,000 from JuneBank at 4%per year to expand the business. |
Mar 7, 2017 | Declared and distributed one-for-fifty share dividend toshareholders on record. Market value per share was RM6. The companyused its retained earnings for the purpose of giving bonusshare. |
May 18, 2017 | Declared cash dividend to ordinary shareholders of RM0.20 pershare, subject to approval at the forthcoming annual generalmeeting. |
June 1, 2017 | Issued 10% three-year bonds payable with a RM150, 000 par valueat the price of RM133, 540. The current market interest rate is12%. |
June 30, 2017 | Payment of cash dividend to ordinary shareholders has beenapproved. The money will be credited to ordinary shareholders inJuly 15, 2018. |
Paid preference dividend. |
Required:
Journalise the above transactions.
Prepare the statement of financial position as at December 31,2017.
Use the following information for Midge Inc. to complete the requirements below.
| Foran Inc. Shareholderâs Equity As at Dec. 31, 2016 | |
| Common Shares, no-par; 500,000 shares authorized; 80,000 issued and outstanding | $600,000 |
| Retained Earnings | 1,000,000 |
| Total Shareholdersâ Equity | $1,600,000 |
2017 Transactions:
| Mar | 3 | Issued 5,000 common shares at $20 per share. |
| June | 11 | Declared a cash dividend of $0.25 per share to common shareholders of record on June 25, payable on July 6. |
| Aug. | 21 | Declared a 5% stock dividend to common shareholders of record on September 5, distributable on September 20. The shares were trading for $22 a share on August 21, $24 on September 5, and $26 on September 20. |
| Nov. | 1 | Issued 3,000 common shares at $25 per share. |
| Dec. | 20 | Declared a cash dividend of $0.30 per share to common shareholders of record on December 31, payable on January 10. |
2017 Net Income: $217,610
Required
A)
i) Record the above transactions for 2017. (Note: Closing entries are not required.)
ii) Prepare the Shareholdersâ Equity section of their financial statements as at Dec. 31, 2017.
B) Feng Corporation has 10,000 Common shares Issued when it announces a 3-for-1 split. Before the split, the shares were trading for $120 per share.
i) After the split, how many shares will be Issued?
ii) How should Feng Corporation record the share split?
iii) Just following the split, what will be the likely share price?
