Q21: Suppose a firm issues a 1,000 Convertible Preference Shares for with a par value of $100 each. Each preference share is convertible into 5 Ordinary Shares with a par value of $5. The credit entry to “Share Premium – Conversion Equity” on the date of issue was for $200,000. Assume that the maturity date of the Convertible Shares has now arrived and the Convertible Preference Shares will be converted into Ordinary Shares.
The Entry to the “Share Capital – Preference” account on the date of conversion will be for an amount of:
a. $100,000
b. $250,000
c. $25,000
d. $10,000
e. None of these answers
Answer( a)
It is because prefrence shares is converted into ordinary shares therefore whole amount of prefrence share capital is debited
Q21: Suppose a firm issues a 1,000 Convertible Preference Shares for with a par value of...
Suppose a firm issues a 1,000 Convertible Preference Shares for with a par value of $100 each. Each preference share is convertible into 5 Ordinary Shares with a par value of $5. The credit entry to “Share Premium – Conversion Equity” on the date of issue was for $200,000. Assume that the maturity date of the Convertible Shares has now arrived and the Convertible Preference Shares will be converted into Ordinary Shares. The Debit Entry to the “Share Capital –...
Q23: Suppose a firm issues a 1,000 Convertible Preference Shares for with a par value of $100 each. Each preference share is convertible into 5 Ordinary Shares with a par value of $5. The credit entry to “Share Premium – Conversion Equity” on the date of issue was for $200,000. Assume that the maturity date of the Convertible Shares has now arrived and the Convertible Preference Shares will be converted into Ordinary Shares. The Entry to the “Share Premium –...
1-Suppose a firm issues a 1,000 Convertible Preference Shares for with a par value of $100 each. Each preference share is convertible into 5 Ordinary Shares with a par value of $5. The credit entry to “Share Premium – Conversion Equity” on the date of issue was for $200,000. Assume that the maturity date of the Convertible Shares has now arrived and the Convertible Preference Shares will be converted into Ordinary Shares. The Debit Entry to the “Share Premium –...
1- Suppose a firm issues a single bond with a face value of $100,000 which is Convertible into 10,000 Ordinary Shares with a Par Value of $1. The credit entry to “Share Premium – Conversion Equity” on the date of issue was for $20,000. Assume that the maturity date of the bonds has now arrived and the bonds will be converted into Ordinary Shares. The Debit Entry to the “Share Premium – Conversion Equity” account on the date of conversion...
Q22:Suppose a firm issues a single bond with a face value of $100,000 which is Convertible into 10,000 Ordinary Shares with a Par Value of $1. The credit entry to “Share Premium – Conversion Equity” on the date of issue was for $20,000. Assume that the maturity date of the bonds has now arrived and the bonds will be converted into Ordinary Shares. The Entry to the “Share Premium – Conversion Equity” account on the date of conversion will be...
q26: Suppose a firm issues a single bond with a face value of $100,000 which is Convertible into 10,000 Ordinary Shares with a Par Value of $1. The credit entry to “Share Premium – Conversion Equity” on the date of issue was for $20,000. Assume that the maturity date of the bonds has now arrived and the bonds will be converted into Ordinary Shares. The Entry to the “Share Premium – Ordinary Shares” account on the date of conversion will...
q25: Suppose a firm issues a single bond with a face value of $100,000 which is Convertible into 10,000 Ordinary Shares with a Par Value of $1. The credit entry to “Share Premium – Conversion Equity” on the date of issue was for $20,000. Assume that the maturity date of the bonds has now arrived and the bonds will be converted into Ordinary Shares. The Entry to the “Bonds Payable” account on the date of conversion will be for an...
Q24: Suppose a firm issues a single bond with a face value of $100,000 which is Convertible into 10,000 Ordinary Shares with a Par Value of $1. The credit entry to “Share Premium – Conversion Equity” on the date of issue was for $20,000. Assume that the maturity date of the bonds has now arrived and the bonds will be converted into Ordinary Shares. The Entry to the “Bonds Payable” account on the date of conversion will be for an...
1- Suppose a firm issues a single bond with a face value of $100,000 which is Convertible into 10,000 Ordinary Shares with a Par Value of $1. The credit entry to “Share Premium – Conversion Equity” on the date of issue was for $20,000. Assume that the maturity date of the bonds has now arrived and the bonds will be converted into Ordinary Shares. The Debit Entry to the “Bonds Payable” account on the date of conversion will be for...
1- Suppose a firm earns Net Income of $1,200,000. The company pays an Ordinary Dividend of $400,000 and a Preference Dividend of $200,000. Throughout the financial year, the firm has 100,000 Ordinary Shares and 200,000 Preference Shares. The firm’s Earnings Per Share (EPS) is: 2- Suppose a firm earns Net Income of $1,000,000. The company does not pay dividends. At the start of the financial year the firm had 980,000 Ordinary Shares. On 31 March, the firm issued 20,000 Ordinary...