Question 1: (40 marks) The following information is extracted from SS Co.'s Statement of Financial Position...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Question 1: (40 marks) The following information is extracted from SS Co.'s Statement of Financial Position at the end of year 3 since its business operation on 1 Jan 2017. Stockholders' equity: Share capital - 9% Cumulative preference shares, $100 par (80,000 authorized) Share capital - ordinary shares, no par (4,000,000 authorized, 3,000,000 issued) Share premium Retained earnings Total equity $000 6,000 3,000 120,000 9,000 138,000 REQUIRED: a. SS Co. issued the preference shares on 1 Jan 2017. Calculate the number of preference shares issued. (2 marks) b. SS Co. issued 1,500,000 ordinary shares on 1 Jan 2017. There were 2,000,000 ordinary shares issued by year end. With net profit of $875,000, calculate the earnings per share for ordinary shares for 2017. (5 marks) c.SS Co. did not declare any dividend in the first two years. At year ended 31 December of year 3, SS Co. paid total cash dividends of $2,850,000. Compute the dividend paid per share during the third year for each of the two classes of stock. (9 marks) d. Prepare journal entries for following transactions occurred during the fourth year: (15 marks) i.) On 1 January, SS Co. repurchased 50,000 ordinary shares at $80 per share. ii) On 1 July, SS Co. reissued 30,000 shares at $50 per share. iii) On 1 October, Issued 50,000 ordinary shares at $90 each e. What is the number of ordinary shares issued and outstanding after item(d)? (5 marks) f. Assuming you are potential investor of SS Co., name two reasons why you would invest in the company in the form of preference share instead of ordinary share? (4 marks) Question 1: (40 marks) The following information is extracted from SS Co.'s Statement of Financial Position at the end of year 3 since its business operation on 1 Jan 2017. Stockholders' equity: Share capital - 9% Cumulative preference shares, $100 par (80,000 authorized) Share capital - ordinary shares, no par (4,000,000 authorized, 3,000,000 issued) Share premium Retained earnings Total equity $000 6,000 3,000 120,000 9,000 138,000 REQUIRED: a. SS Co. issued the preference shares on 1 Jan 2017. Calculate the number of preference shares issued. (2 marks) b. SS Co. issued 1,500,000 ordinary shares on 1 Jan 2017. There were 2,000,000 ordinary shares issued by year end. With net profit of $875,000, calculate the earnings per share for ordinary shares for 2017. (5 marks) c.SS Co. did not declare any dividend in the first two years. At year ended 31 December of year 3, SS Co. paid total cash dividends of $2,850,000. Compute the dividend paid per share during the third year for each of the two classes of stock. (9 marks) d. Prepare journal entries for following transactions occurred during the fourth year: (15 marks) i.) On 1 January, SS Co. repurchased 50,000 ordinary shares at $80 per share. ii) On 1 July, SS Co. reissued 30,000 shares at $50 per share. iii) On 1 October, Issued 50,000 ordinary shares at $90 each e. What is the number of ordinary shares issued and outstanding after item(d)? (5 marks) f. Assuming you are potential investor of SS Co., name two reasons why you would invest in the company in the form of preference share instead of ordinary share? (4 marks)
Expert Answer:
Answer rating: 100% (QA)
Question a Answer Solution Cumulative Preference Shares Divide Par Value Number of Shares issued Que... View the full answer
Related Book For
International Financial Reporting A Practical Guide
ISBN: 978-1292200743
6th edition
Authors: Alan Melville
Posted Date:
Students also viewed these mathematics questions
-
You are required to study the information provided below concerning a Namibian listed company called Deep Yellow Limited, that operates in the mining industry. You should compile a report based on...
-
The consolidated statement of financial position for MIC as at 31 March 2009 and its comparative for 2008 are shown below: The consolidated income statement for MIC for the year ended 31 March 2009...
-
The summarized statements for the year ended 31 December 2007 for Mat, Rug and P entities are as follows: Statements of comprehensive income for the year ended 31 December 2007 The following...
-
Custom Truck Builders frequently uses long-term lease contracts to finance the sale of its trucks. On November 1, 2015, Custom Truck Builders leased to Interstate Van Lines a truck carried in the...
-
Fraud risk factors are events or conditions that indicate I. An incentive or pressure to perpetrate fraud. II. An opportunity to carry out the fraud. III. An attitude or rationalization that...
-
A company has arranged a $20 million line of credit with a bank, allowing the company the flexibility to borrow and repay any amount of funds as long as the balance does not exceed the line of...
-
Define law of the machine.
-
On June 30, New Haven Companys work in Process inventory account showed a beginning balance of $29,400. The Materials Inventory account showed a beginning balance of $240,000. Production activity for...
-
It uses diagnostic techniques complemented by the use of graphics and visualizations to make it easier to understand, such as flow diagrams for process analysis or bar graphs to show the results of...
-
The map below shows the countries of Belize (B), Costa Rica (C), El Salvador (E), Guatemala (G), Honduras (H), Nicaragua (N), and Panama (P). Represent the map as a graph where each vertex represents...
-
What is the importance of market Equilibrium? What is law of diminishing marginal utility? What role does the government play in regulating the market economy? Provide your self-reflection of your...
-
Discuss a few strategies for motivating employees.
-
Which of these theories states that a leaders action directly correlates to the approval, keenness, and performance of their team member? Situational leadership Pathgoal Managerial grid None of...
-
How does motivation affect human behavior and performance?
-
Proximity does not refer to considering the factors that are close to each other as a group. True False
-
Teams include individuals having different skills. True False
-
As a project manager, you store the project RACI chart and Stakeholder analysis chart in two separate locations. What can you do to ensure team members have access to this information? a. Attach the...
-
When you weigh yourself on good old terra firma (solid ground), your weight is 142 lb. In an elevator your apparent weight is 121 lb. What are the direction and magnitude of the elevator's...
-
Identify the main classes of information that should be presented in general purpose financial reports.
-
A company enters into 10,000 contracts with customers, all on the same date. These contracts have very similar characteristics and therefore (as a practical expedient) the company decides to apply...
-
Kellerstone Ltd buys used machines which it reconditions and sells on to customers. The company's inventory at the end of its most recent accounting period included the following machines: Selling...
-
Verify that the log-likelihood of model (7.7) is \(\sum_{i=1}^{k}\left[n_{i} \lambda-\exp (\lambda) ight]\). (a) Compute MLE of \(\lambda\). (b) Compute the Pearson chi-square statistic and compare...
-
Think about the general concept of a relationship, not necessarily in a business setting, but just relationships in general between any two parties. What aspects of relationships are inherently...
-
Has transactional selling gone the way of the dinosaur? That is, are there ever any situations in which a transactional approach to selling would be an appropriate approach today? If so, what are...
Study smarter with the SolutionInn App