Question

Ut on the A.S.P.E suming How would a shareholder interpret the reduction P13-20. Accounting for contributed capital L.O. 13-3) (Medium - 15 minutes) 24 Cambridge Corp has a single class of shares. As at its year ended December 31, 2021, the company had 2,500,000 shares issued and outstanding. On the stock exchange, these shares were trading at around $10 per share. In the company's accounts, these shares had a value of $30,000,000. The equity accounts also show $450,000 of contributed surplus from previous repurchases of shares. On January 15, 2022, Cambridge repurchased and cancelled 100,000 shares at a cost of $10 per share. Later in the year, on August 20, the company repurchased and cancelled a further 300,000 shares at a cost of $15 per share. Required: anities amed arlet Assume that Cambridge follows the guidance in ASPE pertaining to accounting for equity transactions. Record the journal entries for the two share transactions in 2022.

Answer 1

Date Jan 15 Account Titles and Explanation Debit Credit Common Shares $1,000,000 (100,000 x $10) Cash $1,000,000 (100,000 x $10) Aug 20 (300,000 x $10) Common Shares Contributed Surplus Retained Earnings Cash $3,000,000 $450,000 $1,050,000 Balance $4,500,000 (300,000 x $15)