Question

3. Journalizing issuance of shares, treasury shares Mara Berhad has the following information Mara Berhad Statement of Financial Position as at 31 December 2017 RM 2,250,000 Paid in Capital: Preferred shares 100,000 shares authorized 45,000 shares issued and outstanding Ordinary shares 150,000 shares authorized 78,000 shares issued and outstanding Total paid in capital 3,120,000 5,370,000 Retained Earnings 101.000.000 Total Shareholders' Equity 547.100.000 June 1 Issued 8,000 at RM63 per shares to acquire a unit of office building. Depreciation policy for the building is straight line method, 25 years useful life with RM250,000 residual value July 1 Issued 3,000 units of treasury shares RM45 per shares Issued 7,000 preferred shares for cash RM50 per share Required: a) Journalize the transactions b) Prepare the extract of Statement of financial Position

Answer 1

Solution:

	a) Journal Entries
Date	Particulars				Debit	Credit
01-Jun	Office Building                                                      Dr.				5,04,000
	To Ordinary Shares/ Common Stock					3,20,000
	To Paid in Capital A/c					1,84,000
	(Being common stock issued against office building at over par value)
01-Jul	Tteasury Shares A/c                                            Dr.				1,35,000
	To Cash A/c					1,35,000
	(Being 3,000 Treasury Shares issued against cash at RM 45)
	Cash A/c                                                                   Dr.				3,50,000
01-Jul	To Preferred Shares A/c					3,50,000
	(Being Preferred shares issued against cash at par value)
	Depreciation A/c                                                  Dr.				5,927
31-Dec	To Office Building A/c					5,927
	(Being Depreciation Charged on Office building for 7 months)

b) Extract of Statement of Financial Position
Shareholders' Equity
Paid in Capital
Preferred Shares
100,000 shares authorized
52,000 shares issued and outstanding						26,00,000
Ordinary Shares
150,000 shares authorized
86,000 shares issued, 83,000 shares outstanding					34,40,000
Paid in Capital in Excess of par					1,84,000	36,24,000
Retained Earnings						1,01,000
Subtotal						63,25,000
Less : Treasury Shares (3,000 shares at RM 45)						1,35,000
Total Shareholder's Equity						61,90,000