Reference no: EM132991215

Questions -

Q1. Tris Corporation was organized on January 1, 2020, with an authorization of 1,200,000 ordinary shares with a par value of 6 per share. During 2020, the corporation had the following capital transactions:

January 5 issued 675,000 shares @ 10 per share

July 28 purchased 90,000 shares @ 11 per share

December 31 sold the 90,000 shares held in treasury @ 18 per share

Tris used the cost method to record the purchase and reissuance of the treasury shares. What is the total amount of share premium as of December 31, 2020?

a. -0-.

b. 2,070,000.

c. 2,700,000.

d. 3,330,000.

Q2. On December 1, 2020, Tris Corporation exchanged 20,000 shares of its 10 par value ordinary shares held in treasury for a used machine. The treasury shares were acquired by Tris at a cost of 40 per share, and are accounted for under the cost method. On the date of the exchange, the ordinary shares had a fair value of 55 per share (the shares were originally issued at 30 per share). As a result of this exchange, Tris's total equity will increase by

a. 200,000.

b. 800,000.

c. 1,100,000.

d. 900,000.

Q3. Angel Co. issues 10,000 shares of 10 par value convertible preference shares for 12 cash per share. Each share is convertible into 4 ordinary shares. On this date the 1 par value ordinary shares are selling for 3 per share. Approximately 2 years later, Angel's shareholders convert their preference shares into ordinary shares. On the date of conversion the preference shares are selling for 16 and the ordinary shares are selling for 5 per share. The journal entry on the date of issuance will include which of the following?

a. Credit Share Capital-Preference 20,000.

b. Credit Share Premium-Ordinary 20,000.

c. Credit Share Capital-Preference 100,000.

d. Debit Share Premium-Ordinary 20,000.

Q4. In 2020, Ozz, Inc., issued for 103 per share, 60,000 shares of 100 par value convertible preference shares. One share of preference shares can be converted into three shares of Ozz's 25 par value ordinary shares at the option of the preference shareholder. In August 2021, all of the preference shares were converted. The fair value of the ordinary shares at the date of the conversion was 30 per share. What total amount should be credited to share premium-ordinary as a result of the conversion of the preference shares into ordinary shares?

a. 1,020,000.

b. 780,000.

c. 1,500,000.

d. 1,680,000.

Q5. On March 1, 2020, Tris Corporation issued 800,000 of 8% nonconvertible bonds at 104, which are due on February 28, 2032. In addition, each 1,000 bond was issued with 25 detachable share warrants, each of which entitled the bondholder to purchase for 50 one share of Tris ordinary shares, par value 25. The bonds without the warrants would normally sell at 95. On March 1, 2020, the fair value of Tris's ordinary shares was 40 per share and the fair value of the warrants was 2. What amount should Tris record on March 1, 2020 as share premium-share warrants?

a. 40,000

b. 41,600

c. 72,000

d. 83,200