Reference no: EM132787600

Question - VIOLET Corporation was incorporated on January 1, 2020 with the following authorized capitalization:

(a) 40,000 ordinary shares, no par value, stated value 40 per share.

(b) 10,000 shares of 5% cumulative preference share, par value 10 per share. During 2020, Violet issued 24,000 ordinary shares for a total consideration of 1,200,000 and 6,000 preference share at $16 per share. In addition, on December 19, 2020, subscriptions for 2,000 preference shares were taken at a purchase price of $17. These subscribed shares were paid for on January 2, 2021.

1. What should Violet report as total contributed capital in its December 31, 2020 statement of financial position?

$1,294,000

$1,262,000

$1,040,000

$1,330,000

2. How much is the legal capital?

$1,280,000

$1,040,000

$1,296,000

$1,330,000

3. How much share premium is to be reported for the year ended, December 31, 2020?

$276,000

$36,000

$290,000

$50,000