Answered: By what amount should the share premium…

Business

Accounting

By what amount should the share premium account increase as a result of the transaction? Show your solution.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter14: Corporation Accounting

Section: Chapter Questions

Problem 7EB: Silva Company is authorized to issue 5,000,000 shares of $2 par value common stock. In its IPO, the...

See similar textbooks

Related questions

Q: Empresas La Sierra presents the following information: • On January 5, the company issues 25,000…

A: Journal: It refers to an account which shows all the financial transactions pertaining to a…

Q: Item No. 8 is based on the following information: sidsy69 2970 000,001 9 Whistleblow, Inc. issued…

A: The shares issued for legal expenses or other payments, with lower par value, leads to increase…

Q: An investor bought 1,000 shares of ABC company at $15 per share. One year later, the investor sold…

A: The amount that is earned by holding an asset for a certain time period is referred to as 'Holding…

Q: Baur Company acquired 20,000 ordinary shares on October 1 for P1,344,000 to be held for trading. On…

A: Purchase of Shares= 20000 Price paid for the shares= P1344000 Therefore, Price paid for each share=…

Q: Apple Corporation was authorized to issue 10,000 preference shares of P200 par value and 100,000…

A: Premium amount is the difference between the subscription price and face value If the subscription…

Q: Goodwill Corporation was authorized to issue 60,000, P100 par value ordinary share capital on…

A: Authorized share capital—also known as "authorized stock," "authorized shares," or "authorized…

Q: On September 12, 2,600 shares of Aspen Company are acquired at a price of $48.00 per share plus a…

A: 1. CALCULATION FOR PURCHASE OF INVESTMENT : = (2,600 X $48) + $130 = $124,930 2. CALCULATION OF…

Q: On September 12, 3,800 shares of Aspen Company are acquired at a price of $60.00 per share plus a…

A: Brokerage commission paid to purchase the shares will be added to the cost of the shares.

Q: ARIES Inc. had the following transactions in the ordinary shares of May Corporation: anuary 5 Bought…

A: Company means the form of business where management is separately from owner and have perpetual…

Q: On February 22, Triangle Corporation acquired 2,700 shares of the 95,000 outstanding common stock of…

A: The purchase of shares leads to share in profits of the company, whose shares are being purchased.…

Q: Sloan Co. issued 1,000 shares of its P5 par ordinary share to Mercy West as compensation for 1,000…

A: The share premium is the amount received on issuance of share in excess to the face value of shares.

Q: Assume that on February 12, First Union Co. purchases for cash 6,000 shares of Gilbert Co. stock at…

A: Total deividend received = No. of shares x Dividend per share = 6,000 shares x $0.42 per share =…

Q: An entity, Taylor, has issued equity share capital of 250,000 shares with a nominal value of $0.50…

A: We have the following information: Issued capital: 250,000 shares of $0.50 Premium account balance:…

Q: On June 23, 200C, Pinoy Trading owned and operated by Phil was incorporated. On this date, the…

A: Shareholders equity is one of the important element of balance sheet of the business. It means total…

Q: Holiday, Inc. had the following transactions in the ordinary shares of May Corporation: January 5…

A: Bonus issue means additional shares are issued by the company to the current shareholders free of…

Q: On September 1, RAZZIL issued 3,000 shares with par value of P50 par ordinary shares to Atty. Rigor…

A: Share capital means the amount of share that has been issued to shareholder . Share premium means…

Q: Celestial Inc. issued 8,000 shares of its P10 par ordinary shares to a CPA for 600 hrs. of…

A: The company's main source of funding is its share capital. There are two sorts of shares. Ordinary…

Q: Prepare the journal entries for the original purchase, the dividend, and the sale under the cost…

Q: Aquafina Company has 500,000 OMR 1 common shares as on 31 July 2018.The company makes a right issue…

A: Amount of Right share = Number of right share issued * Issue price Number of right share =…

Q: Ogag company issued 1,000 shares of its P5 par value ordinary shares as payment for 1,000 hours of…

A: Par. value of Ordinary Shares :- P5 No. Of Equity Shares issued :- 1000 shares Market Value of…

Q: You are buying 1000 shares of Facebook on January 1, 2021. You paid $320 per share plus a…

A: Journalizing is the process followed by businesses in recording their transactions in an orderly…

Q: On June 23, 200C, Pinoy Trading owned and operated by Phil was incorporated. On this date, the…

A: As stated in the query Phil's Pinoy Trading, which he owns and operates, was incorporated on June…

Q: une 23, 200C, Pinoy Trading owned and operated by Phil was incorporated. On this date, the balance…

A: In basic accounting equation the total assets must be equal to total equity and total liabilities…

Q: On February 22, Triangle Corporation acquired 2,700 shares of the 95,000 outstanding common stock of…

A: Accounting for investment is the process of journalising the transactions occurred due to…

Q: Patience Co. was authorized to issue 400,000 ordinary shares with a stated value of P20. The…

A: Share capital is considered as the portion of capital that is arisen from the investors. When an…

Q: In January 2019, ABC Limited called for subscriptions for 12 millions of shares. The issue price per…

Q: On July 1, 2020, Phoenix company offers to issue their accountant 800 common shares at their current…

A: Entry for expenses paid by cash: Debit Expense, Credit Cash Entry for issue of common shares: Debit…

Q: Pat issued 1,000 shares of its P5 par value ordinary shares to Nenita a compensation for 1,000 hours…

A: Share premium refers to the amount that is determined from the difference shares face or par value…

Q: On July 1, 2018, Nokia Corporation issued 1,000 P10 par ordinary shares and 2,000 P10 par…

A: Share capital is the amount raised by issuing ordinary/common or preference shares by the company.…

Q: JB Ltd was incorporated on 1 July 2021 and issued a prospectus inviting applications for 200,000…

A: Working notes 1) assuming that all forfeited amount must be refunded as per Constitution without…

Q: MIRANA Co. owes P150,000 loan payable to RIKIMARU UNIVERSAL BANK as of June 30, 2014. RIKIMARU…

A: the issue of stock or share is the methodology where undertakings dispense new offers to the…

Q: For the current year, Work-From-Home Company received a donation of 3,000 shares with a par value of…

A: The calculation for the above question is given in the following steps for your reference.

Q: Liberward, Inc., sold and issued 1,000 shares for $15 per share. The book value of the shares was…

A: Shares are a mean of raising capital from the shareholders. Shares can be ordinary shares or…

Q: ABC Ltd., has part of its share capital as 10,000 Redeemable Preference Shares of Rs. 100 each. When…

A: Journal entries are used to record the transactions of business during its operations and it…

Q: On February 22, Triangle Corporation acquired 34,000 shares of the 500,000 outstanding common stock…

A: Journal entry: A journal entry is used to record day-to-day transactions of the business by debiting…

Q: Sintok Niaga Bhd issues 40,000 shares at RM1 each during the year ended 31 December 2019. The…

A: Hi student Since there are multiple questions, we will answer only first question. If you want…

Q: Jungkook Corporation was authorized to issue 10,000 preference shares ofP200 par value and 100,000…

A: Formula: Share premium = Issued price - Par value

Q: On February 22, Stewart Corporation acquired 7,500 shares of the 265,000 outstanding shares of…

A: Introduction: Journals: Recording of a business transactions in a chronological order. First step in…

Q: edunia Berhad was incorporated on 1 July 2020. On 1 August, it decided to issue 300,000 ordinary sha

A: (a) Analysis Table Category Shares Applied Shares Allotted Money Received on Application…

Q: On June 23, 200C, Pinoy Trading owned and operated by Phil was incorporated. On this date, the…

A: Corporation is a legal form of business organisation, under which members invest money or capital in…

Q: Please show all work and answers: 1. On January 1st, ZYX company purchased 1,000 shares of its…

A: Stockholder's Equity - Stockholder's Equity includes the amount contributed by shareholders issued…

Q: On June 1, 2016, Pat Corporation declared a bonus issue entitling its shareholders to one additional…

A: The journal entries are prepared to record daily transactions of the business.

Q: A shareholder owns 15,000 shares costing P3,000,000. Subsequently, the shareholder receives notice…

A: Gain on sale refers to the amount which is made through company while selling the shares for more…

Q: 16. During Year One, Hancock Corporation buys 2,000 shares of Waltz Inc. for P34 per share. Hancock…

A: Investment shall be valued at cost or market price whichever is lower.

Q: Attorneys have helped Mikko Company incorporate and billed the company €12,000 for their services.…

A: Journal entries are passed following the golden rules of accounting. Debit all assets and expenses…

Q: On October 1, 2018, Branded Corporation exchanged 20,000 shares of its P 200 par value of Ordinary…

A: Note:- Since you have asked multiple questions, we will solve the first question for you, if you…

Question

Marco Company issued 1,000 shares with P 5 par to Benn as compensation for 1,000 hours legal services performed. Benn usually bills P160 per hour for legal services. On the date of issuance, the share was trading on a public exchange at 140. By what amount should the share premium account increase as a result of the transaction? Show your solution.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Silva Company is authorized to issue 5,000,000 shares of $2 par value common stock. In its IPO, the company has the following transaction: Mar. 1, issued 500,000 shares of stock at $15.75 per share for cash to investors. Journalize this transaction.
Vishnu Company is authorized to issue 500,000 shares of $2 par value common stock. In conjunction with its incorporation process and the IPO, the company has the following transaction: Apr. 10, issued 1,000 shares of stock for legal services valued at $15,000. Journalize the transaction.
Juniper Company is authorized to issue 5,000,000 shares of $2 par value common stock. In conjunction with its incorporation process and the IPO, the company has the following transaction: Mar. 1, issued 4,000 shares of stock in exchange for equipment worth $250,000. Journalize the transaction.
Prepare general journal entries for the following transactions, identifying each transaction by letter: (a) Gnu Company issued 5,000 shares of 1 par common stock to the Prendergas law firm as partial payment of fees incurred to incorporate the business. Gnu was short of cash, so Prendergas agreed to accept 10,000 cash and the shares of common stock in full settlement of its bill for 55,000. (b) Gnu issued 50,000 shares of 1 par common stock in exchange for a parcel of land for building a shopping plaza. (The list price for the land was 400,000; a similar parcel in the same area sold last week for 380,000. During the past month, the price at which Gnus common stock has traded on the open market has ranged from 5 to 12 per share. Two trades occurred yesterday at 7 and 10 per share.) (c) Gnu purchased 10,000 shares of 1 par value common treasury stock for 70,000. (This is the only treasury stock that Gnu holds.) (d) Gnu sold 4,000 shares of common treasury stock for 32,000. (e) Gnu sold 5,000 shares of common treasury stock for 30,000.
Prepare general journal entries for the following transactions of GOTE Company: (a) Received subscriptions for 10,000 shares of 2 par common stock for 80,000. (b) Received payment of 30,000 on the stock subscription in transaction (a). (c) Received the balance in full for the stock subscription in transaction (a) and issued the stock. (d) Purchased 1,000 shares of its own 2 par common stock for 7.50 a share. (e) Sold 500 shares of the stock on transaction (d) for 8.50 a share.
Kent Corporation was organized on January 1, 2014. On that date, it issued 200,000 shares of 10 par value common stock at 15 per share (400,000 shares were authorized). During the period January 1, 2014, through December 31, 2019, Kent reported net income of 750,000 and paid cash dividends of 380,000. On January 5, 2019, Kent purchased 12,000 shares of its common stock at 12 per share. On December 28, 2019, 8,000 treasury shares were sold at 8 per share. Kent used the cost method of accounting for treasury shares. What is Kents total shareholders equity as of December 31, 2019? a. 3,290,000 b. 3,306,000 c. 3,338,000 d. 3,370,000
Comprehensive Young Corporation has been operating successfully for several years. It is authorized to issue 24,000 shares of no-par common stock and 6,000 shares of 8%, 100 par preferred stock. The Contributed Capital section of its January 1, 2019, balance sheet is as follows: Part a. A shareholder has raised the following questions: 1. What is the legal capital of the corporation? 2. At what average price per share has the preferred stock been issued? 3. How many shares of common stock have been issued (the common stock has been issued at an average price of 23 per share)? Part b. The company engaged in the following transactions in 2019: Required: 1. Answer the questions in Part a. 2. Prepare journal entries to record the transactions in Part b. 3. Prepare the Contributed Capital section of Youngs December 31, 2016, balance sheet.