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- 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.Sun Corporation issues 500 shares of 8 par common stock for a patent. The stock is currently selling for 37 per share on the open market, and no significant impact on the market price is expected by the issuance of the additional shares. Prepare the journal entry to record this transaction.a) JH Bhd issued 20,000 redeemable preference shares for RM20,000 cash on 24 August 2020. Dividend payment is mandatory at 10 sen per share. Redemption is discretionary. The current borrowing cost of the company is 8%. Required: i) Determine the liability component and the equity component of the redeemable preference shares. ii) Provide two other types of preference shares which can be treated as compound financial instrument. b) In a rights offer, AY Bhd issued 500,000 ordinary shares at a price of RM2.00 per share for cash. As a package with the rights issue, the company also issued 500,000 free warrants. The warrants entitle shareholders to subscribe for ordinary shares at an exercise price of RM2.50 per share within two years of the issue. The fair value of the ordinary shares and warrants at the date of issue are RM1.60 and RM0.40 respectively. Required: Explain how AY Bhd should account for the proceeds from rights issue with free warrants and the subsequent exercise of…
- (Multiple Choice) Abesu Corporation issues 100 common shares in exchange for land that is advertised for sale at a price of $125,000. Abesu Corporation's shares currently trade on the Toronto Stock Exchange for $1200 per share. In the journal entry to record issuing the shares, the value of the debits and credits should be: 1. $125 000, because the market value of the shares changes from one day to the next 2. $120 000, because the market value of the shares is known 3. More information is required to answer this question 4. None of the answers are correct 5. $125 000, because the market value of the land is more reliable than the value of the shares1. On March 1, 2012, Abeyance Company issued 10,000 ordinary shares with P200 par value and 20,000 convertible preference shares with P200 par value for a total of P8,000,000. On this date, The ordinary share is selling at P360 and the preference share is selling at P270. What amount of the proceeds should be allocated to the convertible preference shares? a. 6,000,000 b. 5,400,000 c. 4,800,000 d. 4,400,000Marco 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.
- Answer with computation and explanation X Company sold 1,000 ordinary shares at par of P20 per share for P50,000. The journal entry to record the transaction would have a a credit to ordinary shares for P50,000. b credit to share premium for P20,000 C. credit to ordinary shares of P20,000. d. debit to share premium of P30,000PQR SAOG Company has in issue 600,000 OMR 1 equity shares with a current market value of RO 5 each. It offers a rights issue of 5 for 20 shares at an offer price of RO 3. Assuming that if 80% of the offer is taken by the shareholders, how many numbers of right shares will be issued by the company? a. 360,000 b. 120,000 c. 450,000 d. 150,00XYZ SAOG has in issue 5 million, RO 1 equity share. The company decided to make a bonus issue in the ratio of 2 for 5 shares held. Prior to issue of bonus the company had Share premium of OMR 2,500,000. Which of the following journal entry is Correct in respect of issuing bonus shares? a. Debit Share premium OMR 2,000,000 Credit Share Capital OMR 2,000,000 b. Debit Share capital OMR 7,000,000 Credit Share premium OMR 7,000,000 c. Debit Share capital OMR 2,500,000 Credit Share premium OMR 2,500,000 d. Debit Share premium OMR 500,000 Credit Share Capital OMR 500,000
- Markat, a publicly listed company has a March 31st year-end. On 1 April 20X5 Markat issued $20 million 8% convertible loan stock at par. The terms of conversion (on 1 April 20X8) are that for every $100 of loan stock, 50 ordinary shares will be issued at the option of loan stockholders. Alternatively the loan stock will be redeemed at par for cash. Also, on 1 April 20X5 the directors of Markat were awarded share options on 12 million ordinary shares exercisable from 1 April 20X8 at $1.50 per share. The average market value of Markat’s ordinary shares for the year ended 31 March 20X6 was $2.50 each. The income tax is 25%. Earnings attributable to ordinary shareholders for the year ended 31 March 20X6 were $25,200,000 and 84 million ordinary shares in issue. Required: (a) Calculate Markat's basic EPS for the year ended 20X6. (b) Calculate Markat's diluted EPS for the year ended 20X6. (comparative figures are not required)TRUE OR FALSE When 10,000 shares of P20 par value ordinary shares are issued in payment for a parcel of land with a fair market value of P300,000, the Ordinary Shares account is debited for P200,000, and the Share Premium account is debited for P100,000.A. Newport Ltd had an issued share capital at 1 April 2018 of: – $400,000 made up of $0.50 shares. – 100,000 $1 convertible preference shares receiving a dividend of $5.00 per share: – these shares were convertible in 2018 on the basis of 1 ordinary share for 2 preference shares. The company has the following loan capital outstanding: – $500,000 5% convertible loans: – the loan was convertible in 2018 on the basis of 250 shares for each $2,000 of loan; – the tax rate was 30%. Earnings for the year ended 31 March 2019 were $10,000,000 after tax. Required: i. Calculate the diluted EPS for 2019. ii. ii. Outline the need to disclose a diluted EPS figure and on the relevance of this to the shareholders.
