Prepare journal entries for the year 2020

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Reference no: EM132747939

Question: At the beginning of 2020, the X Company had the following shareholders' equity section:-

Common shares, 1,000,000 shares authorized, 300,000 shares issued...............$3,600,000

Retained Earnings.................. 570,000

During 2020, the following transactions took place:-

i. The Company issued 100,000 rights to the shareholders. Ten rights are needed to buy one share at $32 and the rights are void after 30 days. The shares' market price at this time was $34 per share.

ii. The Company sold to the public a $200,000, 10% bond issue at par. The Company also issued with each $100 bond one detachable stock purchase warrant, which provided for the purchase of common shares at $30 per share.

iii. All but 10,000 of the rights issued in item(i) were exercised in 30 days.

iv. At the end of the year, 80% of the warrants in item (i) had been exercised and the remaining were outstanding and in good standing.

Required: Prepare journal entries for the year 2020 to record each of the above transactions, assuming the Company follows IFRS.

Reference no: EM132747939

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