Professional Documents
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The entry to
record this transaction includes a credit to Share Premium–Ordinary for
CHF30,000.
CHF60,000.
CHF120,000.
CHF90,000.
S. Lawyer performed legal services for E. Corp. Due to a cash shortage, an agreement was reached
whereby E. Corp. would pay S. Lawyer a legal fee of approximately $20,000 by issuing 5,000 ordinary
shares (par $1). The shares trade on a daily basis and the market price of the shares on the day the
debt was settled is $3 per share. Given this information, the journal entry for E. Corp. to record this
transaction is:
Dillon Corporation splits its ordinary shares 2 for 1, when the market value is $30 per share. Prior to
the split, Dillon had 50,000 ordinary shares with a $10 par value issued and outstanding. After the
split, the par value of the shares
If Kiner Company issues 5,400 ordinary shares with a $5 par value for $96,000, the account
requires that a liability be recorded for the difference between the sales price and the par value
of the shares.
is a common occurrence in most jurisdictions.
creditors have no legal claim to the assets of the owners unless fraud has occurred.
When ordinary shares are issued for services or non-cash assets, cost should be
either the fair value of the consideration given up or the consideration received,
whichever is more clearly evident.
only the fair value of the consideration received.
The Nice Corporation issues 20,000 preference shares with a $100 par value for cash at $110 per
share. The entry to record the transaction will consist of a debit to Cash for $2,200,000 and a credit or
credits to
Allstate, Inc., has 10,000 shares of 5%, $100 par value, noncumulative preference shares and
100,000 ordinary shares with a $1 par value outstanding at December 31, 2017. If the board of
directors declares a $125,000 dividend, the
preference shareholders will receive $50,000 and the ordinary shareholders will
receive $75,000.
preference shareholders will receive 1/10th of what the ordinary shareholders will receive.
$50,000 will be held as restricted retained earnings and paid out at some future date.