Question
THIS MULTIPLE CHOICE QUESTION (MCQ) IS BASED ON THE SHANDON COMPANY SCENARIO BELOW: SHANDON COMPANY reports the following information at 31 December, 2019: Authorized Share
THIS MULTIPLE CHOICE QUESTION (MCQ) IS BASED ON THE SHANDON COMPANY SCENARIO BELOW:
SHANDON COMPANY reports the following information at 31 December, 2019:
- Authorized Share Capital: 900,000 Ordinary Shares
- Par Value for Ordinary Shares = $3.00 per share
- 200,000 Ordinary shares issued at $24 per share;
- Retained Earnings: $17,500,000
- SHANDON Company has never repurchased its own shares prior to December 31, 2019.
- The following transactions take place during 2020:
August 1: SHANDON Company repurchased 50,000 ordinary shares at $50.00 per share.
October 1: SHANDON COMPANY declares a share dividend of 40% to shareholders of record on October 1. The share dividend is distributed on October 15. Treasury shares are not awarded a share or cash dividend.
November 1: SHANDON COMPANY declares a cash dividend of $1.50 per ordinary share to shareholders of record on November 15. The cash dividend is distributed on November 30.
December 15: SHANDON COMPANY re-issed 30,000 of the ordinary shares repurchased on August 1 at $10 per share.
1. The transaction of August 1 will require which entry with respect to TREASURY SHARES?
Select one:
a. DEBIT $2,500,000
b. DEBIT $2,345,000
c. DEBIT $2,400.000
d. DEBIT $2,488,000
e. None of these answers
2. What amount in dollars (i.e., $) will be shown for Share Premium - Ordinary in the Statement of Financial Position on 31 December 2020?
Select one:
a. $1,750,000
b. $4,100,000
c. $4,200,000
d. $3,750,000
e. None of these answers
3. The journal entry for the transaction of December 15 will require which entry to the Retained Earnings account?
Select one:
a. DEBIT $1,000,000
b. DEBIT $1,400,000
c. DEBIT $1,200,000
d. None of these answers
e. DEBIT $1,800,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started