Ch15

CHAPTER 15

Equity

SOLUTIONS TO BRIEF EXERCISES

BRIEF EXERCISE 15-1

Cash 4,500 Share Capital—Ordinary (300 X €10) 3,000 Share Premium—Ordinary 1,500

BRIEF EXERCISE 15-2

(a) Cash 8,200 Share Capital—Ordinary 8,200

(b) Cash 8,200 Share Capital—Ordinary (600 X €2) 1,200 Share Premium—Ordinary 7,000

BRIEF EXERCISE 15-4

Cash 13,500 Share Capital—Preference (100 X $50) 5,000 Share Premium—Preference 3,100 Share Capital—Ordinary (300 X $10) 3,000 Share Premium—Ordinary 2,400

FV of ordinary (300 X $20) $ 6,000
FV of preference (100 X $90) 9,000 Total FV $15,000

Allocated to ordinary  X $13,500 = $ 5,400

Allocated to preference X $13,500 = 8,100

BRIEF EXERCISE 15-5

Land 31,000 Share Capital—Ordinary (3,000 X £5) 15,000 Share Premium—Ordinary 16,000

BRIEF EXERCISE 15-7

7/1/10 Treasury Shares (100 X €87) 8,700 Cash 8,700

9/1/10 Cash (60 X €90) 5,400 Treasury Shares (60 X €87) 5,220 Share Premium—Treasury 180

11/1/10 Cash (40 X €83) 3,320 Share Premium—Treasury 160 Treasury Shares (40 X €87) 3,480

BRIEF EXERCISE 15-8

8/1/10 Treasury Shares (200 X $80) 16,000 Cash 16,000

11/1/10 Cash (200 X $70) 14,000 Retained Earnings 2,000 Treasury Shares 16,000

BRIEF EXERCISE 15-9

Cash 61,500 Share Capital—Preference (500 X €100) 50,000 Share Premium—Preference 11,500

BRIEF EXERCISE 15-10

Aug. 1
Retained Earnings (2,000,000 X $1)
2,000,000

Dividends Payable

2,000,000

Aug. 15
No entry.

Sep. 9
Dividends Payable
2,000,000

Cash

2,000,000

BRIEF EXERCISE 15-13

Declaration Date.

Retained Earnings
1,300,000

Ordinary Share Dividend Distributable

200,000 Share Premium—Ordinary

1,100,000 (20,000* X $65 = $1,300,000; ( 20,000 X $10 = $200,000)

*400,000 shares X 5%

Distribution Date.

Ordinary Share Dividend Distributable
200,000

Share Capital—Ordinary

200,000

SOLUTIONS TO EXERCISES

EXERCISE 15-1 (15–20