Learning Materials
Features
Discover
Chapter 15: Q15-2ISTQ (page 830)
Under IFRS, the amount of capital received in excess of par value would be credited to:
(a) Retained Earnings.
(b) Contributed Capital.
(c) Share Premium.
(d) Par value is not used under IFRS
Answer
The correct answer is Share premium, option(c).
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
Dave Matthew Inc. issues 500 shares of \(10 par value common stock and 100 shares of \)100 par value preferred stock for a lump sum of \(100,000.
Instructions
a) Prepare the journal entry for the issuance when the market price of the common shares is \)165 each and the market price of the preferred is \(230 each. (Round to the nearest dollar.)
b) Prepare the journal entry for the issuance when only the market price of the common stock is known and it is \)170 per share.
Teller Corporation’s post-closing trial balance at December 31, 2017, was as follows.
TELLER CORPORATION POST-CLOSING TRIAL BALANCE DECEMBER 31, 2017 | ||
Dr. | Cr. | |
Accounts payable | \( 310,000 | |
Accounts receivable | \) 480,000 | |
Accumulated depreciation—building and equipment | 185,000 | |
Allowance for doubtful accounts | 30,000 | |
Bonds payable | 700,000 | |
Building and equipment | 1,450,000 | |
Cash | 190,000 | |
Dividends payable on preference shares—cash | 4,000 | |
Inventories | 560,000 | |
Land | 400,000 | |
Prepaid expenses | 40,000 | |
Retained earnings | 201,000 | |
Share capital—ordinary (\(1 par value) | 200,000 | |
Share capital—preference (\)50 par value) | 500,000 | |
Share premium—ordinary | 1,000,000 | |
Share premium—treasury | 160,000 | |
Treasury shares—ordinary at cost | 170,000 |
|
Totals | \(3,290,000 | \)3,290,000 |
On December 31, 2017, Teller had the following number of ordinary and preference shares.
Ordinary | Preference | |
Authorized | 600,000 | 60,000 |
Issued | 200,000 | 10,000 |
Outstanding | 190,000 | 10,000 |
The dividends on preference shares are \(4 cumulative. In addition, the preference shares have a preference in the liquidation of \)50 per share.
Instructions
Prepare the equity section of Teller’s statement of financial position at December 31, 2017.
(Stock Dividends) Kulikowski Inc., a client, is considering the authorization of a 10% common stock dividend to common stockholders. The financial vice president of Kulikowski wishes to discuss the accounting implications of such an authorization with you before the next meeting of the board of directors.
Instructions
Satchel Inc. purchases 10,000 shares of its own previously issued \(10 par common stock for \)290,000. Assuming the shares are held in the treasury with intent to reissue, what effect does this transaction have on (a) net income, (b) total assets, (c) total paid-in capital, and (d) total stockholders’ equity?
The books of Conchita Corporation carried the following account balances as of December 31, 2017.
Cash \( 195,000
Preferred Stock (6% cumulative, nonparticipating, \)50 par) 300,000
Common Stock (no-par value, 300,000 shares issued) 1,500,000
Paid-in Capital in Excess of Par—Preferred Stock 150,000
Treasury Stock (common 2,800 shares at cost) 33,600
Retained Earnings 105,000
The company decided not to pay any dividends in 2017.
The board of directors, at their annual meeting on December 21, 2018, declared the following: “The current year dividends shall be 6% on the preferred and \(.30 per share on the common. The dividends in arrears shall be paid by issuing 1,500 shares of treasury stock.” At the date of declaration, the preferred is selling at \)80 per share, and the common at \(12 per share. Net income for 2018 is estimated at \)77,000.
Instructions
a) Prepare the journal entries required for the dividend declaration and payment, assuming that they occur simultaneously.
b) Could Conchita Corporation give the preferred stockholders 2 years’ dividends and common stockholders a 30 cents per share dividend, all in cash?
What do you think about this solution?
We value your feedback to improve our textbook solutions.
Explanations 
Textbooks 
Exams 
GCSE 
IGCSE 
AS 
A Level 
International A Level 
University Admissions Tests 
Flashcards 
Vaia AI 
Notes 
Study Plans 
Study Sets 
Find a job 
Find a degree 
Student Deals 
Magazine 
Mobile App