Login Registrieren

Warning: foreach() argument must be of type array|object, bool given in /var/www/html/web/app/themes/studypress-core-theme/template-parts/header/mobile-offcanvas.php on line 20

Chapter 11: Q19QS (page 517)

Air France-KLM reported the following equity information in a recent year (euros in millions). Prepare its journal entry, using its account titles, to record the issuance of capital stock assuming that its entire par value stock was issued on March 31 for cash.
March 31
Issued capital
€ 300
Additional paid-in capital
2,971

Short Answer

Expert verified

Cash should be debited, and share capital and Share premium should be credited.

Step by step solution

01

Meaning of Issuance of common stock

Organizations may provide common stocks as a replacement for the sale of debt or preferred shares. A company's first stock offering of common shares to the general public is an IPO (initial public offering).

02

Preparing journal entry

Date	Particulars	Debit (€)	Credit (€)
	Cash	3,271
	Share capital		300
	Share premium		2,971

Unlock Step-by-Step Solutions & Ace Your Exams!

Full Textbook Solutions
Get detailed explanations and key concepts
Unlimited Al creation
Al flashcards, explanations, exams and more...
Ads-free access
To over 500 millions flashcards
Money-back guarantee
We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Question:

Use the following financial information for Samsung (Samsung.com)

Net income less dividends available to preferred shares (in millions) W 16,317,275

Cash dividends declared for common stock (in millions) . . . . . . . .. . W 2,677,250

Cash dividends declared per common share . . . . . . . . . . . . . . . . . . . W 21,015

Number of common shares outstanding (in millions). . . . . . . . . . . . . . . . . . . 127.397

Weighted-average common shares outstanding (in millions) . . . . . . . . . . 129.190

Equity applicable to common shares (in millions) . . . . .. . . . . . 178,940,338

Required

1. Compute book value per share for Samsung.

2. Compute earnings per share (EPS) for Samsung.

3. Compare Samsung’s dividends per share with its EPS. Is Samsung paying out a large or small amount of its income as dividends? Explain

Answer the following questions related to a company’s activities for the current year:

1. A review of the notes payable files discovers that three years ago the company reported the entire amount of a payment (principal and interest) on an installment note payable as interest expense. This mistake had a material effect on the amount of income in that year. How should the correction be reported in the current-year financial statements?

2. After using an expected useful life of seven years and no salvage value to depreciate its office equipment over the preceding three years, the company decided early this year that the equipment will last only two more years. How should the effects of this decision be reported in the current-year financial statements?

1. Prepare the journal entry to record Tamas Company’s issuance of 5,000 shares of \(100 par value, 7% cumulative preferred stock for \)102 cash per share.

2. Assuming the facts in part 1, if Tamas declares a year-end cash dividend, what is the amount of dividend paid to preferred shareholders? (Assume no dividends in arrears)

Question: Match each description 1 through 4 with the characteristic of the preferred stock that it best describes by writing the letter of that characteristic in the blank next to each description.

A. Cumulative B. Noncumulative C. Nonparticipating D. Participating

1. Holders of the stock are entitled to receive current and all past dividends before common stockholders receive any dividends.

Unilever Group reports the following equity information for the years ended December 31, 2015 and 2014

(euros in millions).

December 31	2015	2014
Share capital	€ 484	€ 484
Share premium	152	145
Other reserves	(7,816)	(7,538)
Retained profit	22,619	20,560
Shareholders’ equity	€ 15,439	€ 13,651

1. Match each of the three account titles—Share capital, Share premium, and Retained profit—with the usual account title applied under U.S. GAAP from the following options:

a. Paid-in capital in excess of par value, common stock

b. Retained earnings

c. Common stock, par value

2. Prepare Unilever’s journal entry, using its account titles, to record the issuance of capital stock assuming that its entire par value stock was issued on December 31, 2014, for cash.

3. What were Unilever’s 2015 dividends assuming that only dividends and income impacted retained profit for 2015 and that its 2015 income totaled €5,259?

See all solutions

Recommended explanations on Business Studies Textbooks

Introduction to Business

Read Explanation

Human Resources

Read Explanation

Influences On Business

Read Explanation

Managerial Economics

Read Explanation

Organizational Communication

Read Explanation

Strategic Analysis

Read Explanation

View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free