Chapter 6
Corporations: Contributed Capital and Dividends
287
AP-20A (
11
)
On March 31, 2016, Darred Inc. had 500,000 outstanding common shares. Its balance sheet on
March 31, 2016 shows the common shares balance of $500,000 and the contributed surplus
balance of zero. The following are the only changes to Darred’s common shares that occurred
between March 31, 2016 and March 31, 2017.
On April 1, 2016, Darred paid $10,000 cash to reacquire 15,000 of its own common shares.
On August 1, 2016, Darred reacquired an additional 30,000 shares for $60,000 cash.
On March 31, 2017, Darred issued 10,000 shares at $1.50 per share.
Required
a) Record the share reacquisition journal entry on April 1, 2016.
Date
Account Title and Explanation
Debit
Credit
b) Record the share reacquisition journal entry on August 1, 2016.
Date
Account Title and Explanation
Debit
Credit
c) After the share issuance on March 31, 2017, how many outstanding common shares would
Darred have? Also, what would be Darred’s common share balance and average cost of
shares after the share issuance?
