Question

Bandara Gold Inc.’s equity section on the October 31, 2014, balance sheet showed the following information:
Common shares, unlimited shares authorized,
500,000 shares issued and outstanding........................................................ $900,000
Retained earnings............................................................................................. 112,500

On November 15, 2014, Bandara’s board of directors declared a 3:1 share split to the shareholders of record on November 20 to be distributed on November 29. The market prices of the shares on November 15, 20, and 29 were $2.25, $0.72, and $0.78, respectively.

Required
1. Prepare the required entries for November 15, 20, and 29.
2. Prepare the equity section on the November 30, 2014, balance sheet, assuming net income earned during November 2014 was $187,500.
Analysis Component: What effect did the share split have on the market price of Bandara’s shares and why?



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  • CreatedJanuary 08, 2015
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