Reference no: EM132941226
Question - Wasp Company is one of your regular audit clients. For the year ended December 31, 2020, the audit of shareholder's equity was assigned to you by the audit manager. There were only few transactions during the current year so you decided to go over all the transactions that transpired during the year. The following balances were reported in the audited financial statements of the previous year:
Ordinary share capital, 100 par value, 500,000 shares authorized, 80,000 shares issued. 8,000,000
Preference shares, 50 par value, 200,000 shares authorized, 100,000 shares issued. 5,000,000
Share premium-ordinary 2,400,000
Share premium-preference 1,000,000
Retained earnings 3,890,000
-On february 28, the company purchased 8,000 of its own ordinary shares from existing shareholders for 1,168,000 to be held as treasury shares.
-On April 16, 20,000 ordinary shares and 10,000 preference shares were issued for a lump-sum price of 4,200,000. The ordinary shares are currently selling at 145 per share while preference shares are currently selling at 85 per share during this period
-On May 2, the company reissued 2,000 of its treasury shares at 138 per share.
-On June 11, the company issued stock rights to its ordinary shareholders. The stock shall entitle the holder to acquire 1 additional ordinary share for every 5 stock rights. The rights have an exercise price of 125 and will expire October 31.
-On July 18, the entity retired 30,000 of the treasury shares and reverted then to unissued basis.
-On October 22, 72,000 stocks were exercised.
-On December 26, the company declared 8 cash dividends to ordinary shares and 12 cash dividens to preference shares. The cash dividends are payable to shareholders as of December 31, payable on January 20,2021.
-Net income for the period was 1,654,000
Required -
1. How much is the ordinary share capital as of December 31, 2020.
2. How much is the preference share capital as of December 31, 2020.
3. How much is the total amount of treasury shares account as of December 31, 2020.
4. How much is the total shareholders' equity as of December 31, 2020.
5. How much is the total share premium.
6. What is the correct debit to retained earnings account as a result of the cash dividends declaration on December 26?
7. What is the balance of the retained earnings- unappropriated account as of December 31, 2020?
8. What is the balance of Share Premium- Ordinary as of December 31, 2020?