Asif Trading Ltd was established during 2017 with an authorized capital of 200,000 common stock of...

 

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Asif Trading Ltd was established during 2017 with an authorized capital of 200,000 common stock of Rs. 50 each. The Company issued 150,000 Common Stock to the public at Rs. 60 each during August, 2017 and continued business. During past two years the performance of the company registered sufficient profitability and after payment of dividends to the shareholders had the balance of Rs. 750,000 in the Retained Earnings Account as on 30 June, 2020 apart from the Premium account. The company purchased it own 20,000 common stocks during August 2020 from the market at Rs. 52 each. These shares were sold at Rs. 48 each and Rs. 55 each in the proportion of 50% at each occasion during January, 2021. Required a) Record the purchase of own Common Stock by the company during August 2020 and present the equity section of the balance sheet as at 31 August, 2020. b) Record the sale of Common Stocks during January, 2021 which were purchased during August 2020 and also present the equity section of the balance sheet as at 31 January, 2021. Asif Trading Ltd was established during 2017 with an authorized capital of 200,000 common stock of Rs. 50 each. The Company issued 150,000 Common Stock to the public at Rs. 60 each during August, 2017 and continued business. During past two years the performance of the company registered sufficient profitability and after payment of dividends to the shareholders had the balance of Rs. 750,000 in the Retained Earnings Account as on 30 June, 2020 apart from the Premium account. The company purchased it own 20,000 common stocks during August 2020 from the market at Rs. 52 each. These shares were sold at Rs. 48 each and Rs. 55 each in the proportion of 50% at each occasion during January, 2021. Required a) Record the purchase of own Common Stock by the company during August 2020 and present the equity section of the balance sheet as at 31 August, 2020. b) Record the sale of Common Stocks during January, 2021 which were purchased during August 2020 and also present the equity section of the balance sheet as at 31 January, 2021.

Answer rating: 100% (QA)

A August 2020 Company purchases 20 000 common stocks at Rs 52 each Ret ai... View the full answer