Chapter 16, Problem 16.8E

(a)

To determine

Shares: A share is the ownership certificate of the company. A share is that part of company’s capital which cannot further divide. Shares define the right to vote and right of participation in the profit of the company.

Journalizing: It is the process of recording the transactions of an organization in a chronological order. Based on these journal entries recorded, the amounts are posted to the relevant ledger accounts.

Accounting rules for journal entries:

• To increase balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue and gains.
• To decrease balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue and gains.

To prepare: Journal entries in the books of Company G.

(b)

To determine

To prepare: Journal entries in the books of Company K.