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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’s journal entry.

Short Answer

Expert verified

The total value of share capital – 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×Parvalue=300×$10=$3,000

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

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Most popular questions from this chapter

Use the information from BE15-13, but assume Green Day Corporation declared a 100% stock dividend rather than a 5% stock dividend. Prepare the journal entries for both the date of declaration and the date of distribution.

(Equity Items on the Balance Sheet) The following are selected transactions that may affect stockholders’ equity.

  1. Recorded accrued interest earned on a note receivable.
  2. Declared a cash dividend.
  3. Declared and distributed a stock split.
  4. Approved a retained earnings restriction.
  5. Recorded the expiration of insurance coverage that was previously recorded as prepaid insurance.
  6. Paid the cash dividend declared in item 2 above.
  7. Recorded accrued interest expense on a note payable.
  8. Declared a stock dividend.
  9. Distributed the stock dividend declared in item 8.

Instructions

In the following table, indicate the effect each of the nine transactions has on the financial statement elements listed. Use the following code: I = Increase, D = Decrease, NE = No effect.

Item

Asset

Liabilities

Stockholders’ Equity

Paid-in Capital

Retained

Earnings

Net Income

What features or rights may alter the character of preferred stock?

In the absence of restrictive provisions, what are the basic rights of stockholders of a corporation?

Explain each of the following terms: authorized capital stock, unissued capital stock, issued capital stock, outstanding capital stock, and treasury stock.
See all solutions

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