Question

Page Ltd. was incorporated as a private company on January 2, 2018, and is authorized to issue an unlimited number of common shares and $1 preferred shares. The company had the following share transactions in its first month of operations:

Jan.	6		Issued 197,000 common shares for $1.50 per share.
	12		Issued 50,000 common shares for $1.81 per share.
	17		Issued 10,200 preferred shares for $26.00 per share.
	18		Issued 453,000 common shares for $2.00 per share.
	24		Reacquired 190,000 common shares at $1.90 per share.

Answer 1

Pass the journal entries as follows: Credit (S) Debit (S) $295,500 Date Account titles and explanation 6-Jan Cash (197,000 x $1.5) Common Stock |(To record issue common stock) $295,500 $90,500 12-Jan Cash (50,000 x $1.81) Common Stock (To record issue common stock) $90,500 $265,200 17-Jan Cash (10,200 x $26) Preferred Stock |(To record issue preferred stock) $265,200 $906,000 18-Jan Cash (453,000 x $2) Common Stock (To record issue common stock) $906,000 $350,740 $10,260 24-Jan Common shares (190,000 x $1.846) Retained earnings ($361,000 - $350,740) Cash (To record treasury stock) $361,000

Compute the average issue price of common shares as follows: (A) Date 6-Jan 12-Jan 18-Jan Total Common shares 197,000 50,000 453,000 700.000 (B) Rate $1.50 $1.81 $2 (A x B) Total value $295,500 $90,500 $906,000 $1.292,000 Average issue price = $1,292,000/700,000 =$1.846