Exam 13: Equities

When a corporation engages in a capital transaction (those relating to its contributed capital),the journal entry may involve either a debit or a credit to contributed surplus.While not permitted by accounting standards,if these debits or credits were to be recognized through income,a debit would be called a "loss" and a credit would be called a "gain." Consider the following sequence of transactions: ∙ Jan.1,2012: Company issues 1,500,000 no par common shares at $14 each. ∙ Jan.1,2018: Company reacquires 150,000 common shares in the open market at $9 each,and cancels them immediately. There were no other capital transactions and the company had not paid any dividends. Required: a.Prepare the journal entries for the two transactions. b.Review the journal entry for January 1,2018.How much was credited other than cash? Does this credit reflect good or bad management? As a shareholder,would you be happy or unhappy about this credit entry? c.What would have been the journal entry for January 1,2018 had the repurchase price been $24? d.In the journal entry for part (c),explain why the debit goes to reduce retained earnings.How would a shareholder interpret the reduction in retained earnings?

Nala Company has two classes of shares that were both issued on January 1,2015: Class A,$10 par value,8% preferred shares,2,750,000 shares issued and outstanding; Class B,no par value common shares issued at $30/share,1,300,000 shares issued and outstanding. Due to challenging start-up problems in 2015 and 2016 there were no dividends paid;in 2017 dividends of $8,000,000 were paid;and,for 2018,dividends paid totaled $16,000,000. Required: How much was the amount of dividends paid to preferred and common shares in 2015 to 2018? First assume that the preferred shares are non-cumulative,then assume that they are cumulative. NC = Non-cumulative C = Cumulative P/S = Preferred shares C/S = Common shares

Assume that a company issued 10,000 shares for $30 and a par value of $2/share.What entry would be required to record the repurchase and cancellation of 1,000 shares at $28/share?

What needs to be reconciled in each of the components of the statement of changes in equity?

Which statement about a "treasury shares " is correct?

Below are details relating to balances for the equity accounts of Paras Company,and changes to those balances.Note that AOCI is accumulated other comprehensive income. Required: Prepare a statement of changes in equity for the years ended December 31,2015

Which statement about a "treasury shares" is correct?

Which statement is correct regarding dividend entitlement?

If 1,000 preferred shares with a par value of $50/share,a dividend rate of 10% and redeemable for $80/share,are sold for $75/share,how much dividend may the preferred equity holders expect to receive?

Which statement about a "share buybacks" is correct?

Which statement about cash dividends is correct?

IAS 1,Presentation of Financial Statements,stipulates that a complete set of financial statements includes a statement of changes in equity for the period.The statement of changes in equity provides information about the changes that took place during the period in all equity accounts.List the four equity accounts.

Assume that a company issued 10,000 shares for $30 and a par value of $1/share.What entry would be required to record the repurchase and cancellation of 1,000 shares at $28/share?

Which statement about "share buyback" is correct?

Which statement best describes the accounting when a company cancels its own shares at an amount greater than their par value?

Explain what a "property dividend " is and why it is not common.Under what circumstances would a property dividend be advisable?

Which statement best describes the accounting when a company cancels its own shares at an amount lower than the average share value?

If 10,000 shares with par value of $15/share are issued for $20/share,how much will be presented as "common shares" for financial statement purposes?

What kind of transaction is "appropriated reserves"?

Which statement is correct about the "single transaction method" for treasury shares?