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Chapter 15: Question 7IFRS (page 825)

Kaymer Corporation issued 300 shares of \(10 par value ordinary shares for \)4,500. Prepare Kaymer鈥檚 journal entry.

Short Answer

Expert verified

The total value of share capital 鈥� ordinary is $3,000.

Step by step solution

01

Meaning of Ordinary Shares

Ordinary shares are the form of stock issued by a corporation and reflect a portion of the company's ownership. They're also known as common stock because they show how much a shareholder holds the stake in the company.

02

Preparing Journal Entries

Date

Particular

Debit ($)

Credit ($)

Cash

4,500

Share Capital-ordinary

3,000

Share Premium-Ordinary

1,500

Working Notes:

Sharecapital-Ordinary=Shareissued脳Parvalue=300脳$10=$3,000

Sharepremium-Ordinary=Cashreceived-Sharecapital-Ordinary=$4,500-$3,000=$1,500

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Most popular questions from this chapter

The term reserves is used under IFRS with reference to all of the following except:

(a) gains and losses on revaluation of property, plant, and equipment.

(b) capital received in excess of the par value of issued shares.

(c) retained earnings.

(d) fair value differences.

Briefly discuss the implications of the financial statement presentation project for the reporting of stockholders鈥� equity.

Explain how underwriting costs and accounting and legal fees associated with the issuance of stock should be recorded.

Weisberg Corporation has 10,000 shares of \(100 par value, 6%, preference shares and 50,000 ordinary shares of \)10 par value outstanding at December 31, 2017.

Instructions

Answer the questions in each of the following independent situations.

  1. If the preference shares are cumulative and dividends were last paid on the preference shares on December 31, 2014, what are the dividends in arrears that should be reported on the December 31, 2017, statement of financial position? How should these dividends be reported?
  2. If the preference shares are convertible into seven shares of \(10 par value ordinary shares and 3,000 shares are converted, what entry is required for the conversion, assuming the preference shares were issued at par value?
  3. If the preference shares were issued at \)107 per share, how should the preference shares be reported in the equity section?

Graves Mining Company declared, on April 20, a dividend of \(500,000 payable on June 1. Of this amount, \)125,000 is a return of capital. Prepare the April 20 and June 1 entries for Graves.
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