Exam 3: Equities

Practice Inc.issued a $10 million bond due in five years,and the bond indenture specifies that the company must set aside $2 million per year in a sinking fund so that the company will have funds to repay the bondholders at the end of 5 years.Assuming that the Practice Inc.complies with the contractual requirements,what would be the journal entries for each of the 5 years?

As of January 1,2018,the equity section of LD Food Co.'s balance sheet contained the following: • On May 1,2018,the company spent $802,500 to repurchase 300,000 common shares.These shares were cancelled immediately. • On July 15,2018,the company repurchased and cancelled 4,000 preferred shares at $15/sh. • On November 1,2018,the company declared and paid the annual cash dividends on the preferred shares.On the same day,the company issued a 5% stock dividend on common shares.LD Food's stock traded at $7/share after the dividend. Required: Record the journal entries for the above transactions occurring in 2018.

In which account would "transactions with non-owners" be reported?

List and explain four reasons why a company might repurchase its own shares.

Which statement is correct respecting a company's repurchase of its own shares?

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

What is the meaning of "contributed capital"?

Briefly describe the primary reason why companies declare a stock split.

Ellwoods Bar and Grill Ltd.sells 1,000 packages of equity security consisting of one common share and one preferred share.Each package was sold for $100; total proceeds were $100,000.At time of sale,the market price of the common shares was $91.00 and the estimated fair value of the preferred shares was $10.00.Contrast the two alternative methods of accounting for this bundled purchase.(a)The company uses the relative fair value method and (b)the company uses the residual value method.Use the following table:

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?

Summarize the difference between IFRS and ASPE respecting specific recognition and measurement standards for items of equity in the following table:

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

Which statement about "common shares" is correct?

Outline the difference between cumulative and non-cumulative dividends.

Supply Company Ltd.issues a $60 million bond due in 10 years,and the bond indenture specifies that the company must set aside $6 million per year in a sinking fund so that the company will have funds to repay the bondholders at the end of 10 years.Assuming that the company complies with the contractual requirements,what would the journal entry be for each of the next 10 years?

List the five classes of transactions that explain the change in equity on the statement of changes in equity.

When does a company record dividends payable?

Here is an extract of a trial balance for Masterious Ltd.Indicate which are examples of transactions with non-owners.

When shares are repurchased at an amount different from their original issue price,then held in treasury or cancelled,will the journal entry affect the following components? Share capital Contributed surplus Treasury stock Loss/gain on share retirement Accumulated other comprehensive income Appropriated reserves Unappropriated retained earnings

Assume that a company issued 10,000 shares for $30/share and a par value of $5/share.1,000 shares were repurchased back at $22/share.Which statement about share repurchases and cancellation is correct?