BAC 201

QUESTION THREE

a) & b)

QUESTION THREE a ) Harare Ltd is authorized to issue 500,000 shares of Kshs 10 par value common stock. 'In its first year, the company had the following transactions. Jan 10: issued 200,000 shares of stock at Kshs. 16 per share. July 1: Issued 50,000 shares of stock for land. The land has an as king price of Kishs 450,000. The stock is currently selling on Nairobi securities . exchange for sh. 16.50 per share. September 1: Purchased 5,000 shares of the treasury at Sh. 18 per shai Fe . December 1:" Sold 2,000 shares of the treasury stock at Kshs 20 per share. Required i ) Journalize the transactions. (8 marks) ii ) Prepare the stockholders equity section assuming the company had retained earnings of Kshs100,000 at December 3 1 (4 marks) Big Shoe Lid had the following information as at 15t January 2016: issued and fully paid capital 400,000, 10% preference shares of Kishs 20 each, 10 million ordinary shares of Keshs.20 each. On ist July 2016, the company decided for rights issue of 1 for every 5 shares held at Kshs30 each. The market price of shares on-the last day of quotation on cum right basis was Kish.50 per share. The profit after tax of the company was Kishs 2,600,000. Required i) _ Compute the basie earnings per share for 2016 ii) Calculate the acfaste. EPS and show the journal entries. (+ marks)