Shareholder equity Hide Ltd, a company whose principal interests are in the manufacture of fine leather shoes and handbags, was formed on 1 January...

Shareholder equity

Hide Ltd, a company whose principal interests are in the manufacture of fine leather shoes and

handbags, was formed on 1 January 2013. Its financial year is a calendar year. Prior to the 2016

period, Hide Ltd had issued 110 000 ordinary shares as follows:

• 95 000 €30 shares were issued for cash on 1 January 2013

• 5000 shares were exchanged on 1 February 2014 for a patent that had a fair value at date of

exchange of €240 000

• 10 000 shares were issued on 13 November 2015 for €50 per share

At 1 January 2016, Hide Ltd had a balance in its retained earnings account of €750 000, while the

general reserve and the asset revaluation surplus had balances of €240 000 and €180 000,

respectively. The purpose of the general reserve is to reflect the need for the company to regularly

replace certain pieces of the shoe-making machinery to reflect technological changes

During the 2016 financial year, the following transactions occurre:

Required

1. Prepare T accounts for share capital and reserves opening balances.

2. Prepare the general journal entries to record the above transactions. need paper narration.

3. Post your journal entries to the T accounts, numbering journal entries. Total your T accounts to calculate closing balances.

4. Prepare the statement of changes in equity for Hide Ltd for the year ended 31 December 2016

in the below format. Cross-check closing balances with your T accounts. Use Vocus group

accounts for ideas for wording your line items.