Please asnwer these two questions and provide accurate answers. Thanks. Problem
ID: 2588318 • Letter: P
Question
Please asnwer these two questions and provide accurate answers. Thanks.
Problem 11-6A (Part Level Submission) Buffalo Limited has been authorized to issue 20,200 £101 par value, 10%, non-cumulative preference shares and 1,109,520 no-par ordinary shares. The corporation assigned a £2.68 stated value to the ordinary shares. At December 31, 2017, the ledger contained the following balances pertaining to equity. Share Capital-Preference Share Premium-Preference Share Capital-Ordinary Share Premium-Ordinary Treasury Shares-Ordinary (1,040 shares) Share Premium-Treasury Retained Earnings £110,090 24,410 1,109,520 1,839,000 10,400 1,040 80,100 The preference shares were issued for land having a fair value of £134,500. All ordinary shares issued were for cash. In November, 1,560 ordinary shares were purchased for the treasury at a per share cost of £10. In December, 520 treasury shares were sold for £12 per share. No dividends were declared in 2017 (a) Prepare the journal entries for the: (Credit account titles are automatically indented when amount is entered. Do not indent manually.) (1) Issuance of preference shares for land (2) Issuance of ordinary shares for cash (3) Purchase of treasury shares (ordinary) for cash. (4) Sale of treasury shares for cash. No. Account Titles and Explanation Debit Credit 1. 2. 3. 4.Explanation / Answer
No Account titles Debit Credit 1 Land 134,500 Share capital - Preference 110,090 Share premium- Prefence 24,410 [Preferred shares issued for land] 2 Cash 2,948,520 Share capital- Ordinary 1,109,520 Share premium- Ordinary 1,839,000 [Ordinary shares issued for cash] 3 Treasury shares- Ordinary 15,600 [1560*10] Cash 15,600 [Ordinary shares purchased] 4 cash 6,240 Treasury shares- Ordinary 5,200 [520*10] Share premium- Treasury 1,040 [6240-5200]