Question
Best Inc. was formed at the beginning of the year. Ordinary share has a $25 par value. The following entries affected the shareholders' equity during
Best Inc. was formed at the beginning of the year. Ordinary share has a $25 par value. The following entries affected the shareholders' equity during its first year's operations:
a.
Cash 150,000
Ordinary Shares. 125,000
Share Premium-Ordinary 25,000
b.
Organization Expense 75,000
Ordinary Shares 62,500
Share Premium-Ordinary 12,500
c.
Cash 29,000
Office Equipment 10,750
Building 30,000
Accounts Payable 29,750
Ordinary Shares 25,000
Share Premium-Ordinary 15,000
d.
Cash 60,000
Ordinary Shares 37,500
Share Premium-Ordinary 22,500
e.
Cash Dividends 7,500
Cash Dividends Payable 7,500
f.
Cash Dividends Payable 7,500
Cash 7,500
g.
Income Summary 30,000
Retained Earnings 30,000
h.
Retained Earnings 7,500
Cash Dividends 7,500
Required: Provide explanations for the journal entries and answer the following questions:
1. What is the profit for the year?
2. How many ordinary shares are outstanding?
3. What is the legal capital?
4. What is the total share capital?
5. What is the retained earnings balance at the end of the year?
6. What is the total shareholders' equity?
7. What is the book value per share of the ordinary shares at theend of the year?
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