19. Square Deal Inc. was organized on January 1, 2020 to manufacture GPS systems and follows...

  

 

 

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19. Square Deal Inc. was organized on January 1, 2020 to manufacture GPS systems and follows IFRS. The corporation was authorized to issue an unlimited number of common shares. On March 1. 2020 the corporation issued 500 of the common shares to the firm's lawyers for helping to organize the corporation. The fair market value of the legal fees was $12.500. The entry to record the issue of 500 shares on March 1, 2020 (market value - $20/share) in connection with the organization costs would require a: a. Credit to Common Shares for $12,500. b. Debit to Legal Fees Expense for $10,000. c. Credit to Common Shares for $ 10,000. d. Credit to Contributed Surplus for $10,000. 17. Preferred shares on which unpaid dividends from past years accumulate and common shareholders cannot receive a dividend until all prior-year and current year dividends on preferred shares have been paid are called: a. Redeemable preferred shares. b. Retractable preferred shares. c. Convertible preferred shares. d. Cumulative preferred shares. e. Callable preferred shares. 18. Preferred shares that can be exchanged for common shares of the issuing corporation at the option of the preferred shareholder are called: a. Cumulative preferred shares. b. Callable preferred shares. c. Convertible preferred shares. d. Redeemable preferred shares. e. Retractable preferred shares. 19. Square Deal Inc. was organized on January 1, 2020 to manufacture GPS systems and follows IFRS. The corporation was authorized to issue an unlimited number of common shares. On March 1. 2020 the corporation issued 500 of the common shares to the firm's lawyers for helping to organize the corporation. The fair market value of the legal fees was $12.500. The entry to record the issue of 500 shares on March 1, 2020 (market value - $20/share) in connection with the organization costs would require a: a. Credit to Common Shares for $12,500. b. Debit to Legal Fees Expense for $10,000. c. Credit to Common Shares for $ 10,000. d. Credit to Contributed Surplus for $10,000. 20. The following information is available for Z Corporation: Preferred shares, $2.50 convertible, noncumulative, 5,000 shares issued $250,000 Common Shares, Unlimited number of shares authorized, 500,000 shares issued 1,000,000 Each preferred share is convertible into four common shares. During the year, 2.000 preferred shares were converted into common shares when the fair value of the common shares was $15 per share. The journal entry to record the conversion would be: a. Preferred Shares... 100,000 Common Shares.. 100,000 b. Preferred Shares.. .... 120,000 Common Shares.. 120,000 C. Preferred Shares.. 120,000 Common Shares, 100,000 Contributed Surplus from Conversion of Preferred Shares.. 20,000 d. Common Shares.. . 100.000 Preferred Shares.. 100.000 19. Square Deal Inc. was organized on January 1, 2020 to manufacture GPS systems and follows IFRS. The corporation was authorized to issue an unlimited number of common shares. On March 1. 2020 the corporation issued 500 of the common shares to the firm's lawyers for helping to organize the corporation. The fair market value of the legal fees was $12.500. The entry to record the issue of 500 shares on March 1, 2020 (market value - $20/share) in connection with the organization costs would require a: a. Credit to Common Shares for $12,500. b. Debit to Legal Fees Expense for $10,000. c. Credit to Common Shares for $ 10,000. d. Credit to Contributed Surplus for $10,000. 17. Preferred shares on which unpaid dividends from past years accumulate and common shareholders cannot receive a dividend until all prior-year and current year dividends on preferred shares have been paid are called: a. Redeemable preferred shares. b. Retractable preferred shares. c. Convertible preferred shares. d. Cumulative preferred shares. e. Callable preferred shares. 18. Preferred shares that can be exchanged for common shares of the issuing corporation at the option of the preferred shareholder are called: a. Cumulative preferred shares. b. Callable preferred shares. c. Convertible preferred shares. d. Redeemable preferred shares. e. Retractable preferred shares. 19. Square Deal Inc. was organized on January 1, 2020 to manufacture GPS systems and follows IFRS. The corporation was authorized to issue an unlimited number of common shares. On March 1. 2020 the corporation issued 500 of the common shares to the firm's lawyers for helping to organize the corporation. The fair market value of the legal fees was $12.500. The entry to record the issue of 500 shares on March 1, 2020 (market value - $20/share) in connection with the organization costs would require a: a. Credit to Common Shares for $12,500. b. Debit to Legal Fees Expense for $10,000. c. Credit to Common Shares for $ 10,000. d. Credit to Contributed Surplus for $10,000. 20. The following information is available for Z Corporation: Preferred shares, $2.50 convertible, noncumulative, 5,000 shares issued $250,000 Common Shares, Unlimited number of shares authorized, 500,000 shares issued 1,000,000 Each preferred share is convertible into four common shares. During the year, 2.000 preferred shares were converted into common shares when the fair value of the common shares was $15 per share. The journal entry to record the conversion would be: a. Preferred Shares... 100,000 Common Shares.. 100,000 b. Preferred Shares.. .... 120,000 Common Shares.. 120,000 C. Preferred Shares.. 120,000 Common Shares, 100,000 Contributed Surplus from Conversion of Preferred Shares.. 20,000 d. Common Shares.. . 100.000 Preferred Shares.. 100.000

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Answer 17 The correct answer is d Cumulative preferred shares Explanation i Cumulative preferred sha... View the full answer