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Prepare journal entries to record transactions for skywalker

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Skywalker Ltd., started on January 1, 2020, was authorized to issue 1,000,000 ordinary shares.  During the fiscal year ending December 31, 2020, the following transactions were completed in the order given.

(1) January 1: 600,000 ordinary shares were issued for cash at $20.

(2) March 15: 25,000 ordinary shares were exchanged for 100,000 Yoda Corporation's shares. At that date, Skywalker's ordinary share were trading at $22 per share in the Hong Kong Stock Exchange, while Yoda Corporation was still an unlisted company. As investment banker placed the estimated value of the Yoda's share as $4 per share.

(3) October 20 : Yoda became a listed company and its share was trading at $5 per share. On the same day, Skywalker declared and paid a property dividend in which it distributed all its investment in Yoda's shares. (Assume that Skywalker has sufficient retained profits for dividend)

Required:

Problem 1: Prepare the journal entries to record all the transactions for Skywalker Ltd in 2020.

Reference no: EM132683147

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