Question - Kappa Corporation had the following shareholders' equity on January 1, 2015:
Common shares, 300,000 shares authorized, 100,000 shares issued and outstanding $810,00 0
Contributed surplus, purchase and cancellation of common shares 290,000
Retained earnings 700,000
The company also had 100,000 preferred shares authorized but none had been issued. Both common shares and preferred shares are without par value.
The following transactions occurred during 2015 (in the order presented):
- Sold subscriptions for 24,000 common shares for $15 per share with 40% of the price paid on subscription.
- Received payments for the balance of the subscriptions. All payments were received except for 4,000 shares. When shares were not paid for, the amounts paid to date were forfeited (i.e., no refund was issued). The subscribed shares were issued.
- Repurchased and retired 50,000 common shares at a cost of $16 per share.
Required: Prepare journal entries to record the transactions set out above.