LN11-ch12-LectureProblems-AFM101s10

LN11-ch12-LectureProblems-AFM101s10 - Chapter 12 Exercise 1...

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Chapter 12 – Exercise 1 (A – January 1) Prepare journal entries for each of the following transactions. Part A (January 1) : Sold and issued 40,000 common shares for cash at $30 per share and issued 5,000 preferred shares for cash of $75 per share with a 8% cumulative dividend. Transaction Account debit credit 1/1/20A Cash 1200000 common shares 1200000 solution: Transaction Account debit credit 1/1/20A Cash 375000 preferred shares 375000
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Chapter 12 – Exercise 1 (A – February 1) Part A (February 1) : Issued 5,000 common shares in exchange for a tract of land. Assume the shares were selling at $75 per share at the time of this transaction. Transaction Account debit credit 2/1/20A Land 375000 common shares 375000 solution:
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Chapter 12 – Exercise 1 (A – June 1) Part A (June 1) : Purchased 7,500 common shares in the open market at $40 per share and subsequently cancelled the repurchased shares. Transaction Account Debit credit 6/1/20A Common shares [7500@$35] 262500 Retained earnings [7500@$5] 37500 cash [7500@$40] 300000 [(1200000+375000)/ (40000+5000)=35 average issue price per common share] solution:
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This note was uploaded on 06/17/2011 for the course AFM 101 taught by Professor Kennedy during the Spring '08 term at Waterloo.

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LN11-ch12-LectureProblems-AFM101s10 - Chapter 12 Exercise 1...

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