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
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