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Exercise 1 On July 1, Pearl River Corporation purchases 500 of its HK$30 par value ordinary...

Exercise 1 On July 1, Pearl River Corporation purchases 500 of its HK$30 par value ordinary shares for the treasury at a cash price of HK$90 per share. On September 1, it sells 400 treasury shares for cash at HK$90 per share. Journalize the two treasury share transactions.

Exercise 2 Chard Inc. issues 6,000 $90 par value preference shares for cash at $105 per share. Journalize the issuance of the preference shares.

Exercise 3 Fields Corporation has 85,000 ordinary shares outstanding. It declares a €5 per share cash dividend on November 1 to shareholders of record on December 1. The dividend is paid on December 31. Prepare the entries on the appropriate dates to record the declaration and payment of the cash dividend.

Exercise 4 Valiant Corporation has 55,000 $10 par value ordinary shares outstanding. It declares a 10% share dividend on December 1 when the market price per share is $15. The dividend shares are issued on December 31. Prepare the entries for the declaration and payment of the share dividend.

Exercise 5 The equity section of Neely Corporation consists of share capital—ordinary (£10 par) £2,500,000 and retained earnings £500,000. A 10% share dividend (30,000 shares) is declared when the market price per share is £12. Show the before-and-after effects of the dividend on the following. (a) The components of equity. (b) Shares outstanding. (c) Par value per share.

Exercise 6 For the year ending December 31, 2018, Abbott Inc. reports net income $150,000 and dividends $55,000. Prepare the retained earnings statement for the year assuming the balance in retained earnings on January 1, 2018, was $225,000.

Solutions

Expert Solution

Exercise 1:
Date Account titles and explanation Debit Credit
July 1. Treasury stock (500*90) 45000
Cash 45000
(Treasury shares purchased)
Sep 1. Cash (400*90) 36000
Treasury stock 36000
(Treasury shares issued)
Exercise 2:
Date Account titles and explanation Debit Credit
Cash (6000*105) 630000
Paid-in capital in excess of par value-preferred stock (Plug) 90000
Preferred stock (6000*90) 540000
(Preference shares issued)
Exercise 3:
Date Account titles and explanation Debit Credit
Nov 1. Dividends (85000*5) 425000
Dividend payable 425000
(Dividend declared)
Dec 1. No entry
Dec 31. Dividend payable 425000
Cash 425000
(Dividend paid)
Exercise 4:
Date Account titles and explanation Debit Credit
Dec 1. Stock dividend (55000*10%*15) 82500
Stock dividend distributable 82500
(Stock dividend declared)
Dec 31. Stock dividend distributable 82500
Common stock (55000*10%*10) 55000
Paid-in capital in excess of par value-common stock (Plug) 27500
(Stock dividend distributed)

ekkarill92 answered 1 year ago
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