Madona  Ltd. begins operations on March 1, 2020, by issuing 1,500,000 shares of $5 par value ordinary shares for cash at $10 per share. The company is authorized to issue 2 million ordinary shares. On April 15, 2020, Madona Ltd. issues 10,000, 4% $20 par value preference shares to attorneys in settlement of their bill of $700,000 for organization costs. The company is authorized to issue 500,000 preference shares. On October 1, 2020, Madona acquires 500,000 shares of its stock at $12 per share.  On November 1, 2020, Madona sell 200,000 shares of its treasury stocks at $13 per share.  On December 1, 2020, Madona sell another 200,000 treasury stocks at $10.5 per share.  At the end of its first year of operation, Madona reported a net income of $500,000.  On December 22, 2020, Madona declares a 1% stock dividend and on this day, the stock market value of ordinary shares is $10 per share.   On December 31, 2020, the company distributes the stock dividends. Prepare the equity section of Madona Ltd on December 31, 2020.

Intermediate Accounting: Reporting And Analysis
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ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter16: Retained Earnings And Earnings Per Share
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Madona  Ltd. begins operations on March 1, 2020, by issuing 1,500,000 shares of $5 par value ordinary shares for cash at $10 per share. The company is authorized to issue 2 million ordinary shares.
On April 15, 2020, Madona Ltd. issues 10,000, 4% $20 par value preference shares to attorneys in settlement of their bill of $700,000 for organization costs. The company is authorized to issue 500,000 preference shares.
On October 1, 2020, Madona acquires 500,000 shares of its stock at $12 per share. 
On November 1, 2020, Madona sell 200,000 shares of its treasury stocks at $13 per share. 
On December 1, 2020, Madona sell another 200,000 treasury stocks at $10.5 per share. 
At the end of its first year of operation, Madona reported a net income of $500,000. 
On December 22, 2020, Madona declares a 1% stock dividend and on this day, the stock market value of ordinary shares is $10 per share.  
On December 31, 2020, the company distributes the stock dividends.

Prepare the equity section of Madona Ltd on December 31, 2020.

 

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