Chapter 15 EQUITY E P
E15-1 (Recording the Issuances of Ordinary Shares) during its first year of operations, Sitwell Corporation had the following transactions pertaining to its ordinary shares.
Instructions
1. (a) Prepare the journal entries for these transactions, assuming that the ordinary shares have a par value of €3 per share.
2. (b) Briefly discuss how the entries in part (a) will change if the shares are nopar with a stated value of €2 per share.
E15-2 (Recording the Issuance of Ordinary and Preference Shares) Abernathy
Corporation was organized on January 1, 2015. It is authorized to issue 10,000 shares of 8%, $50 par value preference shares, and 500,000 shares of no-par ordinary shares with a stated value of $2 per share. The following share transactions were completed during the first year.
Instructions
Prepare the journal entries to record the above transactions.
E15-3 (Shares Issued for Land) Twenty-five thousand shares reacquired by Pierce
Corporation for £48 per share were exchanged for undeveloped land that has an appraised value of £1,700,000. At the time of the exchange, the ordinary shares were trading at £60 per share on an organized exchange.
Instructions
1. (a) Prepare the journal entry to record the acquisition of land, assuming that the purchase of the shares was originally recorded using the cost method.
2. (b) Briefly identify the possible alternatives (including those that are totally unacceptable) for quantifying the cost of the land and briefly support your choice. 1
E15-4 (Lump-Sum Sale of Shares with Bonds) Hewa Corporation is a regional company, whose securities are thinly traded. Hewa has issued 10,000 units. Each unit consists of a CHF500 par, 12% subordinated debenture and 10 shares of CHF5 par ordinary shares. The investment banker has retained 400 units as the underwriting fee.
The other 9,600 units were sold to outside investors for cash at CHF850 per unit. Prior to this sale, the 2-week ask price of ordinary shares was CHF40 per share. Twelve
Instructions
1. (a) Prepare the journal entries for these transactions, assuming that the ordinary shares have a par value of €3 per share.
2. (b) Briefly discuss how the entries in part (a) will change if the shares are nopar with a stated value of €2 per share.
E15-2 (Recording the Issuance of Ordinary and Preference Shares) Abernathy
Corporation was organized on January 1, 2015. It is authorized to issue 10,000 shares of 8%, $50 par value preference shares, and 500,000 shares of no-par ordinary shares with a stated value of $2 per share. The following share transactions were completed during the first year.
Instructions
Prepare the journal entries to record the above transactions.
E15-3 (Shares Issued for Land) Twenty-five thousand shares reacquired by Pierce
Corporation for £48 per share were exchanged for undeveloped land that has an appraised value of £1,700,000. At the time of the exchange, the ordinary shares were trading at £60 per share on an organized exchange.
Instructions
1. (a) Prepare the journal entry to record the acquisition of land, assuming that the purchase of the shares was originally recorded using the cost method.
2. (b) Briefly identify the possible alternatives (including those that are totally unacceptable) for quantifying the cost of the land and briefly support your choice. 1
E15-4 (Lump-Sum Sale of Shares with Bonds) Hewa Corporation is a regional company, whose securities are thinly traded. Hewa has issued 10,000 units. Each unit consists of a CHF500 par, 12% subordinated debenture and 10 shares of CHF5 par ordinary shares. The investment banker has retained 400 units as the underwriting fee.
The other 9,600 units were sold to outside investors for cash at CHF850 per unit. Prior to this sale, the 2-week ask price of ordinary shares was CHF40 per share. Twelve