E12-4

Luis SLU issued 1.000 ordinary shares

Instructions
prepare the entry for the issuance under the following assunptions.
a. The shares had a par value of $5 per share and were issued for a total of $48.000
cash/bank € 48,000
capital stock account € 5,000
share premium € 43,000

b. The shares had a stated value of $5 per share and were issued for a total of $48.000
cash/bank € 48,000
capital stock account € 5,000
share premium € 43,000

c. The shares had no par or started value and were issued for a total of $48.000
cash/bank € 48,000
capital stock account € 48,000

d. The shares had a par value of $5 per shares and were issued tp attorneys for services during
preliminary expenses € 48,000
capital stock account € 5,000
share premium € 43,000

e. The shares had a par value of $5 per shares and were issued for land worth $48.000
land & buildings € 48,000
capital stock account € 5,000
share premium € 43,000

Jurnal
Date Explanation Debit Kredit
a. Cash € 48,000
Share Capital-Ordinary € 48,000

b. Cash € 48,000
Share Capital-Ordinary € 5,000
Share Premium-Ordinary € 43,000

c. Cash € 48,000
　　Share Capital-Ordinary € 48,000

d. Service € 48,000
Share Capital-Ordinary € 5,000
Share Premium-Ordinary € 43,000

e. Land € 48,000
 Shares Capital-Ordinary € 5,000
Shares Premium-Ordinary € 43,000

P12-3 The equity accounts of Terell SE on January 1, 2020, were as follows.

a. Journalize the transaction and the closing entry for net income.

Date Accounts Ref Debit Kredit

1-Feb Cash € 120,000
Share capital ordinary (1*30.000) € 30,000
Share premium ordinary € 90,000

14-Apr Cash € 42,000

Treasury share (2,5 * 9.000) € 22,500
Share premium treasury € 19,500

3-Sep Patents € 32,000

Share capital ordinary (1*7.000) € 7,000
Share premium ordinary € 25,000

10-Nov Treasury shares € 6,000

Cash € 6,000

31-Dec Income summary € 452,000

retained earning € 452,000

b. Enter the beginning balance in the accounts, and post the journal entrries accounts.
(use J5 for the psoting reference)

Share capital ordinary

Date Accounts Ref Debit Kredit Balance
1-Jan Beginning J5 € 400,000

Share Capital ordinary

Date Accounts Ref Debit Kredit Balance
1-Jan Beginning J5 € 1,000,000
1-Feb Issued for cash J5 € 30,000 € 1,030,000
3-Sep Issued for patent J5 € 7,000 € 1,037,000

Share premium preferences

Date Accounts Ref Debit Kredit Balance
1-Jan Beginning J5 € 100,000

Share Premium ordinary

Date Accounts Ref Debit Kredit Balance
1-Jan Beginning J5 € 1,450,000
 1-Feb Issued for cash J5 € 90,000 € 1,540,000
3-Sep Issued for patent J5 € 25,000 € 1,565,000

Share premium treasury

Date Accounts Ref Debit Kredit Balance
1-Apr Sale J5 € 19,500 € 19,500

Treasury shares ordinary

Date Accounts Ref Debit Kredit Balance
1-Jan Beginning J5 € 50,000
14-Apr Sale J5 € 22,500 € 27,500
10-Nov Purchase J5 € 6,000 € 33,500

Retained earning
Date Accounts Ref Debit Kredit Balance
1-Jan Beginning J5 € 1,816,000
31-Dec Net Income J5 € 452,000 € 2,268,000

c. Prepare an equity section at December 31, 2020, including the disclosure of the preference
dividends arrears

TERREL SE - Statement of financial position

Equity
Share Capital - Preference (9%, 50 par cumulative, 10.000 share authorized) € 400,000
Share Capital - Ordinary (1 started value, 2.000.000 share authorized) € 1,037,000
Share premium preferences € 100,000
Share premium ordinary € 1,565,000
Share premium treasury € 19,500
retained earning € 2,268,000
Less: treasury shares (20.000 shares) € (33,500)
Total Equity € 5,356,000
P12-5

1. Retained earning account fro 2020

Retained earning
1-Oct € 240,000 1-Jan € 1,158,000
31-Dec € 425,000 31-Dec € 585,000
Balance € 1,743,000

2. Retained earning account statement for 2020

Russo
Retained earning statement
for the year ended Dec, 31 2020
Balance Jan, 1 € 1,158,000
Add:
Net Income € 585,000
€ 1,743,000
Less:
Cash dividends € (240,000)
Share dividends € (425,000)
€ (665,000)
Balance Dec, 31 € 1,078,000

3. Equity section at Dec 31, 2020

TERREL SE - Statement of financial position

Equity
Share Capital - Preference € 600,000
Share Capital - Ordinary share dividends distributable € 2,500,000
Share premium preferences € 250,000
Share premium ordinary € 250,000
retained earning € 425,000
Less: treasury shares (20.000 shares) € 1,078,000
Total Equity € 5,103,000

4. allocation of the cash dividend to preference and ordinary shares

Total cash dividend € 240,000
Allocation to preference shares
Dividend in 2019 (12.000 shares x 50 x 8%) € 48,000
Dividend in 2020 (12.000 shares x 50 x 8%) € 48,000
Remainder to ordinary shares € 144,000