Exercise 5. Various share capital transactions Joshua Company has two classes of share capital outstanding: 10%, P50 par preference share capital and P10 par ordinary share capital. At December 31, 2019, the following accounts were included in the shareholder's equity: Preference Share Capital, 100,000 shares Ordinary Share Capital, 1,000,000 shares Preference Share Premium P5,000,000 Ordinary Share Premium P10,000,000 Retained Earnings P4,500,000 The following transactions have affected the shareholder's equity of the company during the year 2020: Jan.1 Issued 15,000 preference shares at P60 per share. Feb.1 Issued 25,000 ordinary shares at P25 per share. July 1 Reacquired 20,000 ordinary shares at P14 per share. Oct. 31 Reissued 15,000 treasury shares at P16 per share. Dec.31 Profit for the year is P2,500,000. Prepare the journal entries of the foregoing transactions and prepare the Shareholder's equity section of the Company as of December 31, 2020.

Hh1.

Information concerning the capital structure of Catan Corporation follows Dec. 31, 2019 Dec. 31, 2020 100,000 shares 100,000 shares 10,000 shares $ 2,000,000 Common shares outstanding Convertible preferred shares outstanding 9% convertible bonds 10,000 shares Select one: a. $ 3.65 b. $ 4.75 c. $ 3.33 d. $ 5.00 $ 2,000,000 During 2020, Catan paid dividends of $ 1.00 per common share and $2.50 per preferred share. The preferred shares are non-cumulative, and convertible into 20,000 common shares. The 9% convertible bonds are convertible into 50,000 common shares. Net income for calendar 2020 was $500,000. Assume the income tax rate is 30%. Basic earnings per share for 2020 is

2. Following in the Balance Sheet of Navrang Co. Ltd., as on 31st December 2020. Share Capital: 3000 5% pref. shares of *100 each 6000 Equity shares of 100 each 6% Debentures Bank Overdraft Creditors Goodwill Land & Buildings 3,00,000 Machinery 22,500 3,00,000 4,50,000 Stock 65,000 6,00,000 Debtors 70,000 1,50,000 Cash 7,500 1,50,000 Profit and Loss Account 75,000 Preliminary expenses 3,50,000 10,000 1275000 1275000 On the above date the company adopted the following scheme of reconstruction. i) The preference shares are to be reduced to fully paid shares of *75 each and equity shares are to be reduced to shares of 40 each fully paid. ii) The Debenture holders took over stock and debtors in full satisfaction of their claims. iii) The fictitious assets are to be eliminated. iv) The land and buildings to be appreciated by 40% and machinery to be depreciated by 30%. Give Journal entries incorporating the above scheme of reconstruction and prepare the reconstructed balance sheet. 20 was as…

A-7

PART 1 EQUITY At 30 June 2021, the equity of Bourne Ltd comprised share capital of $29,880,000 (comprising 5,000,000 ordinary shares issued and paid to $6.00 per share, less share issue costs of $120,000), general reserve of $250,000, retained earnings of $2,500,000. The following transactions and events occurred during the year ending 30 June 2022: ● On 6 July 2021 a dividend of $420,000 was paid. This dividend had been declared on 29 March 2021 by the Directors from retained earnings (and had not required any further approval/authorisation). ● On 1 August 2021 the directors made a bonus share issue of 1 ordinary share issued and paid to $6.00 for every 100 shares held. This was made using the total amount in the general reserve, with the remainder from retained earnings. ● On 2 February 2022, the Directors declared and paid an interim dividend of $320,000 from retaining earnings. . On 29 June 2022, the Directors declared a dividend of 8 cents per share from retained earnings. This…