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Question 9IFRS

Intermediate Accounting (Kieso)
Found in: Page 825

Short Answer

Ravonette Corporation issued 300 shares of $10 par value ordinary shares and 100 shares of $50 par value preference shares for a lump sum of $13,500. The ordinary shares have a market price of $20 per share, and the preference shares have a market price of $90 per share.


Prepare the journal entry to record the issuance.

Share capital – Preference amount is $5,000.

Share capital – Ordinary amount is $3,000.

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Step by Step Solution

Meaning of Preference Share

Preferred shares, commonly known as preferred stock, are shares that empower the shareholders to receive the profits declared by the company before the shareholders accept the value. If the company has chosen to pay its profits to the investors, the preference shareholders are the primary ones to receive payment from the company.

Preparing Journal Entries



Debit ($)

Credit ($)



Share capital-preference


Share premium-preference


Share capital-ordinary


Share premium-ordinary


Working Notes:

Calculation of Share Capital –Preference Amount

Calculation of Share Capital Ordinary amount

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