Gabrial Ltd

question 194

Essay

Gabrial Ltd. was incorporated February 1, 2013 and is authorized to issue an unlimited number of preferred and common shares. The company entered into the following transactions during the year:
Feb 10 Issued 30,000 common shares for $23 per share.
Feb 21 Issued 700 common shares to the company's accountants as payment for a bill of $18,000 for services performed in helping the company to incorporate.
Mar 16 Issued 1,000 convertible preferred shares for $95 per share.
Sep 10 Issued 5,000 convertible preferred shares for $105 per share.
Oct 1 Converted 1,000 preferred shares into common shares. One preferred share is convertible into 10,000 common shares. The fair value of the common and preferred shares are $25 and $102 respectively.
Instructions
Prepare the journal entries to record the above transactions.

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Definitions:

Acquisition Method

A set of procedures used in accounting to consolidate the financial statements of two companies in the event of a merger or acquisition.

Pre-Acquisition Income

The earnings generated by a company before it was acquired by another entity.

Investment Adjustment

An investment adjustment refers to changes made to the carrying amount of an investment due to factors such as dividends received or changes in the investee's equity.

Carrying Value

The recorded value of an asset in a company's financial statements, considering factors like depreciation or amortization.