Reference no: EM133057039
Question - Use the information to answer Questions 1 and 2.
On December 31, 2021, Marz-N-Roketz Corporation reported 800,000 common shares outstanding and 2,000,000 common shares authorized. The corresponding common share capital was reported at $5,234,600.
Q1. Assume that on March 1, 2022, Marz issued 12,000 common shares to Havee Fuelz, Inc., in exchange for equipment with a fair market value of $130,000. The board of directors determined the appropriate market value per share as $7. On July 1, Marz purchased 20,000 of its shares in the market at $6.10 each and cancelled them. What will be the revised amount of the common share capital following these transactions?
a. $5,187,000. b. $5,124,000.
c. $5,232,467. d. $5,198,720.
e. None of the above
Q2. IGNORE the transactions in [1] above. Marz declared a 15% stock dividend. The board of directors determined the appropriate market value per share as $8 after the effects of the dividend. (ie: ex-dividend). How much should be recorded for the stock dividend?
a. $960,000. b. no entry.
c. $785,190. d. $2,400,000.
e. None of the above
Q3. For Question 2 above, assume the same facts except that the $8 per share market value was prior to the dividend declaration. How much should be recorded for the stock dividend?
a. 0 b. $960,000
c. $834,783 d. $640,000.
e. none of the above
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