Subhan Industries, Jhelum was established about 10 years ago with an authorized capital of 500,000 Common...
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Subhan Industries, Jhelum was established about 10 years ago with an authorized capital of 500,000 Common Stock of Rs. 100 each. The Company had issued 300,000 Common Stocks at Rs. 130 each in the past. The balance of revenue reserves and retained earnings as appearing in the equity section of the balance sheet was amounting to Rs. 800,000 and Rs. 650,000 respectively apart from the Premium on Common Stock Account. The Company last year purchased its common stock of 50,000 at Rs. 125 each and retained it. During current year the Board of Directors decided to retire the common stock equivalent to the purchase quantum as the volume of business was facing market slump. Required a) Prepare necessary accounting entry for purchase of own common stock by the company from the market as of last year. b) During current year prepare necessary accounting entries for retirement of the common stock purchased during last year. c) Prepare equity section of the balance sheet of the company separately as of the last year after purchase of common stock and of the current year after retirement of certain portion of the common stock of the company. Subhan Industries, Jhelum was established about 10 years ago with an authorized capital of 500,000 Common Stock of Rs. 100 each. The Company had issued 300,000 Common Stocks at Rs. 130 each in the past. The balance of revenue reserves and retained earnings as appearing in the equity section of the balance sheet was amounting to Rs. 800,000 and Rs. 650,000 respectively apart from the Premium on Common Stock Account. The Company last year purchased its common stock of 50,000 at Rs. 125 each and retained it. During current year the Board of Directors decided to retire the common stock equivalent to the purchase quantum as the volume of business was facing market slump. Required a) Prepare necessary accounting entry for purchase of own common stock by the company from the market as of last year. b) During current year prepare necessary accounting entries for retirement of the common stock purchased during last year. c) Prepare equity section of the balance sheet of the company separately as of the last year after purchase of common stock and of the current year after retirement of certain portion of the common stock of the company.
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Answer 1 Purchase of common stock Last year the company purchased 50000 share... View the full answer
Related Book For
Andersons Business Law and the Legal Environment
ISBN: 978-1305575080
23rd edition
Authors: David P. Twomey, Marianne M. Jennings, Stephanie M Greene
Posted Date:
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