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10. State what would happen to the equity of Kicking Horse Oil Ltd. after each of the following independent transactions: (a) The founders of the company made an initial investment of $100,000, receiving 100,000 common shares in exchange. (b) The company borrowed $250,000 from a bank. (c) The company listed its shares on the Calgary Stock Exchange and sold 1,000 common shares to the general public for $1,000,000. (d) The company sold 100,000 10% cumulative preference shares to the general public for $100,000. (e) The company invested $1,250,000 in oil exploration rights. (f) The company paid $2,000 interest on the bank loan. (g) The oil exploration rights were revalued at $5,000,000. (h) In year 1, the company reported a loss of $50,000. In (i) G) At the end of year 2, the company paid a dividend of $10,000 to the preference shareholders and $25,000 to the common shareholders. year 2, the company reported a net income of $200,000.

10. State what would happen to the equity of Kicking Horse Oil Ltd. after each of the following independent transactions: (a) The founders of the company made an initial investment of $100,000, receiving 100,000 common shares in exchange. (b) The company borrowed $250,000 from a bank. (c) The company listed its shares on the Calgary Stock Exchange and sold 1,000 common shares to the general public for $1,000,000. (d) The company sold 100,000 10% cumulative preference shares to the general public for $100,000. (e) The company invested $1,250,000 in oil exploration rights. (f) The company paid $2,000 interest on the bank loan. (g) The oil exploration rights were revalued at $5,000,000. (h) In year 1, the company reported a loss of $50,000. In (i) G) At the end of year 2, the company paid a dividend of $10,000 to the preference shareholders and $25,000 to the common shareholders. year 2, the company reported a net income of $200,000.

Financial Accounting
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter13: Corporations: Organization, Stock Transactions, And Dividends
Section: Chapter Questions
Problem 3PA: The following selected accounts appear in the ledger of EJ Construction Inc. at the beginning of the...
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Solve part e, f, g, h, i, and part j
10. State what would happen to the equity of Kicking Horse Oil Ltd. after each of the following independent transactions: (a) The founders of the company made an initial investment of $100,000, receiving 100,000 common shares in exchange. (b) The company borrowed $250,000 from a bank. (c) The company listed its shares on the Calgary Stock Exchange and sold 1,000 common shares to the general public for $1,000,000. (d) The company sold 100,000 10% cumulative preference shares to the general public for $100,000.
Transcribed Image Text:10. State what would happen to the equity of Kicking Horse Oil Ltd. after each of the following independent transactions: (a) The founders of the company made an initial investment of $100,000, receiving 100,000 common shares in exchange. (b) The company borrowed $250,000 from a bank. (c) The company listed its shares on the Calgary Stock Exchange and sold 1,000 common shares to the general public for $1,000,000. (d) The company sold 100,000 10% cumulative preference shares to the general public for $100,000.
(e) The company invested $1,250,000 in oil exploration rights. (f) The company paid $2,000 interest on the bank loan. (g) The oil exploration rights were revalued at $5,000,000. (h) In year 1, the company reported a loss of $50,000. In (i) G) At the end of year 2, the company paid a dividend of $10,000 to the preference shareholders and $25,000 to the common shareholders. year 2, the company reported a net income of $200,000.
Transcribed Image Text:(e) The company invested $1,250,000 in oil exploration rights. (f) The company paid $2,000 interest on the bank loan. (g) The oil exploration rights were revalued at $5,000,000. (h) In year 1, the company reported a loss of $50,000. In (i) G) At the end of year 2, the company paid a dividend of $10,000 to the preference shareholders and $25,000 to the common shareholders. year 2, the company reported a net income of $200,000.
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