Prepare Journal Entries for Shareholders' Equity Transactions

question 129

Essay

Prepare journal entries for shareholders' equity transactions.
A partial list of the ledger accounts of Skyway Corporation is shown below, followed by a list of transactions. Indicate the accounts that would be debited and credited in recording each transaction.
$\begin{array}{|l|l|l|l|l|}\hline 1 & \text { Cash } & & 21 & \text { Ordinary Share } \$ 10 \text { Par } \\\hline 2 & \text { Land } & & 25 & \text { Share Premium } \\\hline 3 & \text { Organization Costs } & & 26 & \text { Donated Capital } \\\hline 10 & \text { Dividends Payable } & & 30 & \text { Retained Earnings } \\\hline 20 & \begin{array}{l}\text { Preference Share } \$ 100 \\\text { Par }\end{array} && 40 & \text { Income Summary } \\\hline\end{array}$
$\begin{array}{llr}\text { Transactions }&\text { Account(s) } & \text { Account(s) } \\&\text { Debited } & \text { Credited } \\ \text { Example Issued preference share for cash at a price above par. } &1&20.25\\ \text { (a) Declared a catin dive par ordinaty share } &\\ \text {(b) 10,000 shares of \( \$ 10 \) par ordinay shares are issued in exchange for land } &\\ \text { apprased at \( \$ 1 \) mitlion } &\\ \text { (c) Paid attoney for services relating to formation of the corporation. } &\\ \text { (d) Ordinary shares are sold for cash at a price above par. } &\\ \text { (e) The dividend declared in a, above, is paid.} &\\ \text {(f)Income Summary account is closed at the end of a profitable period. } &\\ \text {(g) Land is donated to the corporation by the City of Chicago. } &\\\end{array}$

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