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Summary

Company was organized at the beginning of current year. The entity provided the following transactions affecting shareholders’ equity:Jan. 1 Memo-The entity was authorized to issue share capital as follows: Preference share capital, P100 par, 30,000 shares 3 000 000 Ordinary share capital, P50 par, ...

Description

Company was organized at the beginning of current year. The entity provided the following transactions affecting shareholders’ equity: Jan. 1 Memo-The entity was authorized to issue share capital as follows: Preference share capital, P100 par, 30,000 shares 3 000 000 Ordinary share capital, P50 par, 100,000 shares 5 000 000 Total authorized share capital 8 000 000 Jan. 16 40,000 ordinary shares were issued for cash at P60 per share. Cash (40T*60) 2 400 000 Ordinary share capital (40T*50) 2 000 000 Share premium-OS 400 000 Feb. 12 10,000 preference shares were issued at P120 for cash. Cash (10T*120) 1 200 000 Preference Share capital(10T*100) Share premium- PS

1 000 000 200 000

Mar. 2 10,000 preference shares were subscribed at P110 per share. Subscriptions receivable (10T*110) 1 100 000 Subscribed pref. share capital (10T*100) 1 000 000 Share premium-PS 100 000 April 26 25% of the above subscription was received. Cash (1.1M*25%) 275 000 Subscriptions receivable

275 000

May 6 1,000 preference shares were issued in payment of legal fees of P100,000 in connection with organizing the corporation. Legal expenses 100 000 Preference share capital 100 000 May 20 20,000 ordinary shares were issued for machinery which had a fair value of 1,300,000. Machinery 1 300 000 Ordinary share capital (20T*50) 1 000 000 Share premium- OS 300 000 June 28 15,000 ordinary shares were subscribed at par. Subscriptions receivable (15T*50) 750 000 Subscribed ordinary share capital

750 000

July 7 Received 40% of the June 28 subscription. Cash (750T*40%) 300 000 Subscriptions receivable

300 000

July 30 The balance on the preference share subscription was collected and issued the certificate thereof. Cash (1.1M*75%) 825 000 Subscriptions receivable 825 000 Subscribed preference share capital 1 000 000 Preference share capital

1 000 000

Aug. 25 Acquired 5,000 ordinary shares at P40 per share. These shares are to be held as treasury. Treasury shares (5 000*40) 200 000 Cash 200 000 Sept. 4 Reissued 2,000 treasury shares at 50 per share. Cash (2 000*50) 100 000 Treasury share (2 000*40) Share premium- treasury

80 000 20 000

Sept. 15 Reissued 1,000 treasury shares at P35 per share. Cash (1 000*35) 35 000 Share premium- treasury 5 000 Treasury share (1 000*40)

40 000

Oct. 29 Retired the remaining treasury shares. These shares were originally issued at P60 per share. Ordinary share capital (2 000*50) 100 000 Share premium- treasury 20 000 Treasury share (2 000*60) 120 000 Nov. 3 Received cash of P120,000 as donation. Cash 120 000 Donated capital

120 000

Nov. 16 Received the balance of the June 28 subscription and issued the certificate thereof. Cash (750T*60%) 450 000 Subscriptions receivable 450 000

Subscribed ordinary share capital Ordinary share capital

750 000 750 000

Dec. 15 Issued 5,000 ordinary shares at P60 per share. Cash (5 000*60) 300 000 Ordinary share capital (5 000*50) Share premium- OS

250 000 50 000

Dec. 31 Net income for the year is P2,000,000. Profit and loss 2 000 000 Retained earnings

2 000 000

Required: 1.) Prepare journal entries under memorandum method. 2.) Prepare the shareholders’ equity section of the statement of financial position...