Question

Kanish Corporation's general ledger includes the following account balances: Contributed Surplus Common Shares Retained Earnings $8,000...

Kanish Corporation's general ledger includes the following account balances:

Contributed Surplus

Common Shares

Retained Earnings

$8,000

$270,000

$85,000

The Contributed Surplus account arose from net excess of proceeds over cost on a previous cancellation of common shares. The average cost of the common shares bought and cancelled in the first two transactions is $30 per share.

Instructions

Assuming that the above balances existed before any of the transactions that follow, record the journal entries for each transaction.

(a)  Bought and cancelled 430 shares at $38 per share.

(b)  Bought and cancelled 200 shares at $44 per share.

(c)  Sold 3,200 shares at $41 per share.

(d)  Sold 1,500 shares at $47 per share.                                           

Business   Accounting   
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Answer #1
S. No. Particulars Debit($) Credit($)
a) Common Shares A/c Dr. (430*$38) 16340
To Cash A/c (430*$30) 12900
To General Reserve A/c 3440
b) Common Stock A/c Dr.(200*$44) 8800
To Cash A/c (200*$30) 6000
To General Reserve A/c 2800
c) Cash A/c Dr. (3200*$41) 131200
To Common stock (3200*$30) 96000
To Paid in Capital A/c 35200
d) Cash A/c Dr. (1500*$47) 70500
To Common stock A/c (1500*$30) 45000
To Paid in Capital A/c 25500
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