Riviere-Rouge Corp. is authorized to issue 8,000,000 no par value common shares.

Question

Riviere-Rouge Corp. is authorized to issue 8,000,000 no par value common shares. In its' year end financial statements on December 31, 2013 the company reported 500,000 common shares issued and outstanding, common share capital of S5,942,000, contributed surplus-common share repurchases of S10,000 and contributed surplus-expired warrants on common shares of S30,000. Required: Prepare the journal entries required to record the following equity related transactions as listed below during 2014: a] Jan. 1: 40,000 common shares were sold for cash at $11 per share with issue costs amounting to S10,000. Mar. l:65,000 common shares were repurchased for S12.50 each in the market Apr. 1: Subscribers apply for and are allocated to purchase 300,000 common shares at S15 June 1 : The company calls for 60% of the outstanding subscriptions still due. All subscribers b] c] per share with a 50% down payment. All subscriptions are accepted. d] pay the required amounts. e] Aug. 1: The remaining subscriptions due are called in. Subscribers for 2,000 shares default and they forteit all of their deposits as per the terms of the issue. t] Sept. l:The company issues the shares to the eligible subscribers g] Sept. 1: The company received S10,000 to write 2,000 call options on 2,000 shares of Toronto Wonderland Inc. giving the holder the right to buy Toronto Wonderland shares for S60 each until December 31, and are settleable by the holder before that.

Explanation / Answer

Rieviere Rouge Group Journal entries Ref Date Account title and explanation Debit Credit a Jan.1 Cash 440000 Common stock 440000 (To record issue of 40,000 shares of common stock @$11 per share) b Mar.1 Treasury stock 812500 Cash 812500 (To record repurchase of 65,000 shares of common stock @$12.50 per share) c Apr.1 Cash 2250000 Share application money 2250000 (To record application money received for 300,000 shares @$7.50 per share) d June.1 Cash 1350000 Share 1st call 1350000 (To record receipt of $4.50 per share on 1st call for shares subscribed on April1) e Aug.1 Cash 894000 Share 2nd call 894000 (To record receipt of share 2nd call money for 298000 shares) f Aug.1 Share application money 15000 Share 1st call 9000 Share forfeiture account 24000 (To record forfeiture of amount on 2000 shares for not receiving the 2nd call amount) g Sept.1 Share application money 2235000 Share 1st call 1341000 Share 2nd call 894000 Common stock 4470000 (To record issue of 298,000 shares for the subscribers who have fully paid ) Face value of shares offered 15.00 Payable on application   (50%) 7.50 Balance due 7.50 Fisrt call amount    (60% of balance due) 4.50 Second call amount 3.00

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