A. ABC Company was incorporated on September 1, 2018. The company had two transactions below related to its ordinary shares with a par value of $5 per share.
September 1: Issued 8,000 ordinary shares for cash at $5 per share.
November 16: Issued 20,000 ordinary shares for a patent with a fair value of $300,000.
Required: Prepare journal entries for the two transactions above for ABC Company.
5 marks
B. ABC Company has the following treasury share transactions during November 2018 for the first time after its incorporation:
November 1: Bought 5,000 ordinary shares at $29 a share.
November 13: Sold 2,500 treasury shares at $30 a share.
Required: Prepare journal entries for the two transactions above for ABC Company using the cost method.
5 marks
A)
Date | Account title | Debit | credit |
September 1 | cash | 40000 | |
common stock (8000*5) | 40000 | ||
November 16 | Patent | 300000 | |
common stock (20000*5) | 100000 | ||
paid in capital in excess of par -common stock | 200000 |
B)
Date | Account title | Debit | credit |
November 1 | Treasury stock | 145000 | |
cash (5000*29) | 145000 | ||
November 13 | cash (2500*30) | 75000 | |
Treasury stock (2500*29) | 72500 | ||
paid in capital in excess of cost -treasury stock | 2500 |
A. ABC Company was incorporated on September 1, 2018. The company had two transactions below related...
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