Lee Holdings Ltd

question 134

Essay

Lee Holdings Ltd. was incorporated on January 2, 2014 and on that date issued 50,000 common shares for cash at $1 each. On April 30, Lee issued 1,000 preferred, $3 cumulative preferred shares, convertible to common shares at the rate of 6 common shares for one preferred share. The preferred shares were issued for $18 each. On October 15, 600 of the preferred shares were converted to common shares. On that date, the market value was $1.50 for the common shares and $17.50 for the preferred shares. On December 15, 10,000 common shares were reacquired for $0.90 each.
Instructions
a. Journalize the share transactions described.
b. Calculate the number of issued shares and average cost per share of each class remaining at the end of the year.

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Definitions:

Excess (Deficiency)

The amount by which actual income exceeds or falls short of the budgeted amount.

Cash Budget

A financial tool used by businesses to plan for their cash inflows and outflows over a specific period to manage liquidity.

Budgeted Disbursements

Forecasted cash outflows for a specific period, often part of a company's cash budget and crucial for managing liquidity.

Desired Balance

The targeted amount of funds or resources a company or individual aims to have available at a certain point in time for a specific purpose.