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Holland Incorporateds records provide the following information on January 1, 2016: Preferred stock, $50 par (5,000 shares authorized, issued, and outstanding) $250,000 Common stock, $10

Holland Incorporateds records provide the following information on January 1, 2016:

Preferred stock, $50 par (5,000 shares authorized, issued, and outstanding) $250,000
Common stock, $10 par (20,000 shares authorized, 10,000 shares issued and outstanding) 100,000
Additional paid-in capital on preferred stock 50,000
Additional paid-in capital on common stock 80,000
Retained earnings 95,000

During 2016, the following transactions were recorded by Holland:

1. Reacquired 250 shares of preferred stock for $53 per share.
2. Reacquired 500 shares of common stock for $20 per share.
3. Sold 200 shares of the common stock acquired in Transaction 2 for $27 per share.
4. Sold 250 shares of preferred stock acquired in Transaction 1 for $59 per share.
5. Sold 100 shares of the common stock acquired in Transaction 2 for $18 per share.

Required:

1. Prepare journal entries to record the stock transactions of Holland assuming it uses the cost method of accounting for treasury stock.
2. Prepare the shareholders equity section of the Holland balance sheet at December 31, 2016, assuming 2016 net income was $30,000 and dividends distributed were $10,000.
3. Next Level Assume that Holland is using IFRS. At the end of 2016, Holland revalued its property, plant, and equipment upward by $40,000. Discuss how Hollands shareholders equity items would be different under IFRS, and then, based on your answer, repeat Requirement 2.

X

Chart of Accounts

CHART OF ACCOUNTS
Chapter 15
General Ledger
ASSETS
111 Cash
121 Accounts Receivable
141 Inventory
152 Prepaid Insurance
181 Equipment
198 Accumulated Depreciation
LIABILITIES
211 Accounts Payable
231 Salaries Payable
250 Unearned Revenue
261 Income Taxes Payable
EQUITY
305 Preferred Stock
311 Common Stock
318 Additional Paid-in Capital on Preferred Stock
320 Additional Paid-in Capital on Common Stock
321 Additional Paid-in Capital on Treasury Stock
331 Retained Earnings
336 Treasury Stock: Preferred
337 Treasury Stock: Common
REVENUE
411 Sales Revenue
EXPENSES
500 Cost of Goods Sold
511 Insurance Expense
512 Utilities Expense
521 Salaries Expense
532 Bad Debt Expense
540 Interest Expense
541 Depreciation Expense
559 Miscellaneous Expenses
910 Income Tax Expense

X

Amount Descriptions

Amount Descriptions
Reserve Account
Revaluation Surplus
Share Capital - Common Stock
Share Capital - Preferred Stock
Share Premium - Common Stock
Share Premium - Preferred Stock
Share Premium - Treasury Stock
Treasury Shares

X

General Journal

Prepare journal entries to record the stock transactions of Holland assuming it uses the cost method of accounting for treasury stock during 2016. Additional Instruction

PAGE 1

GENERAL JOURNAL

DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT

1

2

3

4

5

6

7

8

9

10

11

12

13

X

Balance Sheet

Prepare the shareholders equity section of the Holland balance sheet at December 31, 2016, assuming 2016 net income was $30,000 and dividends distributed were $10,000. Additional Instructions

Holland Incorporated

Shareholders' Equity

December 31, 2016

1

Contributed Capital:

2

3

4

5

6

7

Total contributed capital

8

9

Total Contributed Capital and Retained Earnings

10

11

Total Shareholders Equity

Holland Incorporated

Equity and Reserves

December 31, 2016

1

Equity:

2

3

4

5

6

7

8

Total equity

9

10

Reserve Account

11

Total Equity and Reserves

Holland Incorporated uses IFRS. At the end of 2016, Holland revalued its property, plant, and equipment upward by $40,000. Which of the following is correct regarding Holland's shareholders' equity items?

I. Holland will report the account Retained Earrnings.
II. Holland will report revaluation surplus of $40,000.
III. Holland's total shareholders' equity is the same amount it would be under U.S. GAAP.

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