The following information was discovered during an audit, before the books of Sorima- Corporation were closed for 2019: 1. No record had been made of a 50% share dividend declared and issued in June 2019. Prior to the share dividend, the corporation had 200,000 shares of P10 par value ordinary shares outstanding. The stock was selling for P21 per share when the share dividend was declared. 2. On Sept. 1, 2019, the corporation purchased 1,000 shares of its own ordinary shares for P24 a share and included the stock with its trading investments. On Oct. 1, 2019, it sold 500 of these shares for P25 per share. 3. In November, 2,000 shares of P100 par value convertible preference shares, which had originally been issued at par, were converted to ordinary shares. Each share of preference shares was convertible into four shares of ordinary shares. 4. On Dec. 30, 2019, Sorima Corporation declared a P1 per share cash dividend on ordinary shares. Since the dividend was not to be paid until Jan. 15, 2020, no entry was made.
The following information was discovered during an audit, before the books of Sorima- Corporation were closed for 2019: 1. No record had been made of a 50% share dividend declared and issued in June 2019. Prior to the share dividend, the corporation had 200,000 shares of P10 par value ordinary shares outstanding. The stock was selling for P21 per share when the share dividend was declared. 2. On Sept. 1, 2019, the corporation purchased 1,000 shares of its own ordinary shares for P24 a share and included the stock with its trading investments. On Oct. 1, 2019, it sold 500 of these shares for P25 per share. 3. In November, 2,000 shares of P100 par value convertible preference shares, which had originally been issued at par, were converted to ordinary shares. Each share of preference shares was convertible into four shares of ordinary shares. 4. On Dec. 30, 2019, Sorima Corporation declared a P1 per share cash dividend on ordinary shares. Since the dividend was not to be paid until Jan. 15, 2020, no entry was made.
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter7: Receivables And Investments
Section: Chapter Questions
Problem 7.6P
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Hello. Please help me answer this. Prepare the necessary correcting entries. Thanks.
Transcribed Image Text:PROFESSOR:
Problem #13
Correction of Errors
The following information was discovered during an audit, before the books of Sorima
Corporation were closed for 2019:
1. No record had been made of a 50% share dividend declared and issued in June
2019. Prior to the share dividend, the corporation had 200,000 shares of P10 par
value ordinary shares outstanding. The stock was selling for P21 per share when the
share dividend was declared.
2. On Sept. 1, 2019, the corporation purchased 1,000 shares of its own ordinary shares
for P24 a share and included the stock with its trading investments. On Oct. 1, 2019,
it sold 500 of these shares for P25 per share.
3. In November, 2,000 shares of P100 par value convertible preference shares, which
had originally been issued at par, were converted to ordinary shares. Each share of
preference shares was convertible into four shares of ordinary shares.
4. On Dec. 30, 2019, Sorima Corporation declared a P1 per share cash dividend on
ordinary shares. Since the dividend was not to be paid until Jan. 15, 2020, no entry
was made.
Required: Prepare the necessary correcting entries.
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