please prepare the journal entriesQ1. Sold 22,500 Treasury shares at $2 each.Q2. Purchased 10% shareholding in Charlie Limited, a supplier, as a long-term investment. The fair value of the 10% shareholding was $2,900,000 as at 1 March. The purchase consideration included a $2,700,000 note receivable due from Charlie Limited and the related interest receivable balance of $144,000, $140,000 cash and a motor vehicle owned by ITI. The motor vehicle was originally obtained at $120,000. ( for depreciation details, refer to Q1 of additional information.)Q3. A 10% share dividend was declared when the market value per share was $2.1.Q4. Paid cash to acquired 30,000 shares of its own at $2.3 each. ITI intends to keep the shares for several months for management bonus. Intelligent Toys, Inc (“ITP") is a well establish toys trading company which adopts the periodicsystem. ITI prepares its financial statements on a monthly basis. The trial balance of ITI as at28 February 2021 is presented as follows:Intelligent Toys, IncTrial BalanceAs at 28 February 2021Account TitleDebitCredit($)($)Accounts Payable420,000Accounts Receivable675,000745,200Accumulated Depreciation - BuildingAccumulated Depreciation - EquipmentAccumulated Depreciation - Motor Vehicle570,000664,668Allowance for Doubtful Accounts20,250Building9,720,000Cash1,001,520Dividends Payable120,000Equipment990,000Interest Receivable144,000750,000Long-term InvestmentMerchandise InventoryMotor Vehicle975,000832,5002,700,00018,000Notes ReceivablePrepaid InsuranceRetained EarningsSalaries PayableShare Capital – Ordinary$1 par value, 10,000,000 shares authorized,6,000,000 shares issued2,077,212105,300and 5,977,500 shares outstandingShare Capital – Preference5%, $100 par value, noncumulative,6,000,000100,000 shares authorized,6,000,00060,000 shares issued and outstandingShare Premium – Ordinary840,000Share Premium – Preference300,000Share Premium- TreasurySupplies9,0009,360Treasury Shares (22,500 shares)56,25017,871,63017,871,630

S.No Particulars Amount Dr. Amount Cr. 1. Bank A/c Loss on sale A/c To Treasury Shares A/c…

Answered: please prepare the journal entries Q1.…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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please prepare the journal entries

Q1. Sold 22,500 Treasury shares at $2 each.

Q2. Purchased 10% shareholding in Charlie Limited, a supplier, as a long-term investment. The fair value of the 10% shareholding was $2,900,000 as at 1 March. The purchase consideration included a $2,700,000 note receivable due from Charlie Limited and the related interest receivable balance of $144,000, $140,000 cash and a motor vehicle owned by ITI. The motor vehicle was originally obtained at $120,000. ( for depreciation details, refer to Q1 of additional information.)

Q3. A 10% share dividend was declared when the market value per share was $2.1.

Q4. Paid cash to acquired 30,000 shares of its own at $2.3 each. ITI intends to keep the shares for several months for management bonus.

Intelligent Toys, Inc (“ITP") is a well establish toys trading company which adopts the periodic
system. ITI prepares its financial statements on a monthly basis. The trial balance of ITI as at
28 February 2021 is presented as follows:
Intelligent Toys, Inc
Trial Balance
As at 28 February 2021
Account Title
Debit
Credit
($)
($)
Accounts Payable
420,000
Accounts Receivable
675,000
745,200
Accumulated Depreciation - Building
Accumulated Depreciation - Equipment
Accumulated Depreciation - Motor Vehicle
570,000
664,668
Allowance for Doubtful Accounts
20,250
Building
9,720,000
Cash
1,001,520
Dividends Payable
120,000
Equipment
990,000
Interest Receivable
144,000
750,000
Long-term Investment
Merchandise Inventory
Motor Vehicle
975,000
832,500
2,700,000
18,000
Notes Receivable
Prepaid Insurance
Retained Earnings
Salaries Payable
Share Capital – Ordinary
$1 par value, 10,000,000 shares authorized,
6,000,000 shares issued
2,077,212
105,300
and 5,977,500 shares outstanding
Share Capital – Preference
5%, $100 par value, noncumulative,
6,000,000
100,000 shares authorized,
6,000,000
60,000 shares issued and outstanding
Share Premium – Ordinary
840,000
Share Premium – Preference
300,000
Share Premium- Treasury
Supplies
9,000
9,360
Treasury Shares (22,500 shares)
56,250
17,871,630
17,871,630

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