Chapter 7 Solution Manual - Partnership & Corporation (23rd Edition) by Zenaida Manuel PDF

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Summary

CHAPTER 7Exercise 1 a) Aug. 1 Authorized to issue 50,000 8% preference shares at P100 par and 100,000 ordinary shares at P50 par.Subscription Receivable-Ordinary share 1,500, Subscribed Ordinary Share Capital 1,500, (30,000 x P50) Cash 500, Subscription Receivable-Ordinary Share 500,Aug. 5 Subscript...

Description

CHAPTER 7 Exercise 1 a) Aug. 1

Authorized to issue 50,000 8% preference shares at P100 par and 100,000 ordinary shares at P50 par.

Aug. 5

Aug. 10

Aug. 12

Subscription Receivable-Ordinary share Subscribed Ordinary Share Capital (30,000 x P50) Cash Subscription Receivable-Ordinary Share

1,500,000

Subscription Receivable-Preference Share Subscribed Preference Share Capital 20,000 x P100 Cash Subscription Receivable-Preference Share

2,000,000

Cash (20,000 x 55) Ordinary Share Capital Ordinary Share Premium

1,100,000

Equipment Preference Share Capital Preference Share Premium

Aug. 30

Sept. 1

Sept. 30

1,500,000 500,000 500,000

2,000,000 1,000,000 1,000,000

1,000,000 100,000 560,000 500,000 60,000

Cash Subscription Receivable-Preference Share

1,000,000

Subscribed Preference Share Capital Preference Share Capital

2,000,000

1,000,000

2,000,000

Cash Subscription Receivable-Ordinary Share Capital

500,000

Cash Subscription Receivable-Ordinary Share

466,667

Subscribed Ordinary Share Capital Ordinary Share Capital

500,000

466,667 1,400,000

1,400,000 b) Preference Shares: Authorized to issue 50,000 preference shares par P100 Issued 25,000 shares P2,500,000 Ordinary Shares: Authorized to issue 100,000 ordinary shares par P50 Issued 48,000 shares 2,400,000 Subscribed 2,000 shares 100,000 Additional Paid In Preference Share Premium 60,000 Ordinary Share Premium 100,000 Total Paid In P5,160,000 Ex .2 a) 2018 May1 Authorized to issue 100,000, 12% Cumulative Preference shares at P100 per share Authorized to issue 200,000 ordinary shares At P50 per share Subscription Receivable-Preference Shares (30,000 xP100) Subscribed Preference Share Capital To record common stock subscription of incorporators.

3,000,000

Subscription Receivable- Ordinary Shares (60,000 x P50 ) Subscribed Ordinary Share Capital

3,000,000

3,000,000

3,000,000

To record common stock subscription of incorporators.

43

Cash Subscription Receivable-Preference Share(3,000,000 x .25) Subscription Receivable-Ordinary Share (3,000,000 x .25) To record downpayment of incorporators. June 05

15

17

30

July 1

15

18

20

30

750,000 750,000

Organization Expense Cash Paid for organization cost.

120,000

Subscription Receivable-Preference Share(5,000 x P110) Subscribed preference share capital (5,000 x P100) Preference share Premium To record subscription of various investors.

550,000

Cash (550,000 x .25) Subscription Receivable-Preference share To record downpayment of various investors.

137,500

120,000

500,000 50,000

137,500 1,560,000

Subscription Receivable-Ordinary Share(30,000 x P52) Subscribed Ordinary Share Capital Ordinary Share Premium

1,500,000 60,000

Cash (1,560,000 x .25) Subscription receivable-Ordinary Share To record downpayment of common stock subscription. Cash Subscription receivable-Preference Share Subscription Receivable-Ordinary Share To record first installment of incorporators.

390,000 390,000 2,250,000 1,125,000 1,125,000

Cash Subscription Receivable-Ordinary Share

1,170,000

Subscribed Ordinary Share Ordinary Share Capital

1,500,000

1,170,000 1,500,000

Cash Subscription Receivable-Preference Share

137,500 137,500

Land Ordinary Share Capital Ordinary Share Premium

75,000 70,000 5,000

Cash Subscription Receivable-Preference Share Subscription Receivable-Ordinary Share

750,000 375,000 375,000

Subscribed Preference Share Subscribed Ordinary Share Preference Share Capital Ordinary Share Capital

1,000,000 1,000,000

Cash Subscription Receivable-Preference Share Subscription Receivable-Ordinary Share

1,500,000

Subscribed Preference Share Capital Subscribed Ordinary Share Capital Preference Share Capital Ordinary Share Capital

2,000,000 2,000,000

Income Summary Retained Earnings

105,000

Preference Share May 1 Jun 15 17 July 1

1,500,000

Subscribed Preference 3,000,000 500,000

1,000,000 1,000,000 750,000 750,000

2,000,000 2,000,000

105,000 Pref Share Premium

Ordinary Share

Subscribed Ordinary Shares 3,000,000

Ordinary Share Prem

1,500,000 (1,500,000)

60,000

50,000 1,500,000

Retained Earnings

18 20

1,000,000

(1,000,000)

70,000 1,000,000

44

(1,000,000)

5,000

30

2,000,000 P3,000,000

(2,000,000) 500,000

2,000,000 P50,000

(2,000,000)

P4,570,000

0

105,000 P65,000

105,000

Legal Capital P8,070,000 Shareholders’ Equity: Paid In Capital Authorized 100,000 18% cumulative preference shares, at P100 par Issued and Outstanding Preference Share, 30,000 Subscribed 5,000 Authorized 200,000 common shares, at P50 par Issued and Outstanding Ordinary Shares, 91,400 Additional Paid In Capital: Premium on Preference Shares Premium on Ordinary Shares Total Paid In Capital Ex. 3. a) Journal entries: Jan 05 Unissued preference share (20,000 x P100) Authorized Preference share capital

30

Feb 21

25

28 Mar 1

10

18

P3,000,000 500,000 4,570,000

50,000 65,000

2,000,000 2,000,000

Unissued Ordinary Share (50,000 x P50) Authorized Ordinary Share

2,500,000

Subscription Receivable-ordinary shares Subscribed Ordinary Shares

500,000

Cash Subscripton Receivable-ordinary shares

125,000

2,500,000

500,000 125,000

Subscription Receivable – preference share (5,000xP100) Subscribed preference share

500,000

Cash Subscription Receivable – preference share

250,000

Cash (750 x P105) Unissued preference share (750 x P100) Preference Share Premium Land (P50,000 x 2.20) Unissued preference share (1,100 x P100) Organization Expense Cash Cash (500,000 x .75= 375,000 x .5) Subscription Receivable-Ordinary shares Subscription Receivable – Ordinary Share (2,000 x P62) Subscribed Ordinary Share (2,000 x P50) Paid in capital in excess of stated value-ordinary share

115,000 P8,185,000

500,000 250,000 78,750 75,000 3,750 110,000 110,000 75,000 75,000 187,500 187,500 124,000 100,000 24,000

Cash (124,000 x .25) Subscription Receivable – ordinary share

31,000

Cash Subscription Receivable – ordinary share

70,400

Subscribed ordinary share (1,200 x P50) Unissued ordinary share

60,000

31,000 70,400

60,000

Cash Subscription Receivable – preference share

250,000

Subscribed preference share

500,000

250,000

Unissued preference share

500,000

45

31

Income & expense summary Retained earnings

Authorized Unissued Preference Preference Shares Shares 2,000,000 2,000,0000

Jan5

Subscribed Preference ShareCaptl

85,000 85,000 Prefer Share Prem

Authorized Ordinary Shares 2,500,000

Retained Subscribed In Earnings Ord Shares Excess Of Stated Captl

Unissued Ordinary Shares 2,500,000

500,000 Jan30 Feb21 Feb25 Mar 1 Mar10 Mar18 Mar31

(75,000) (110,000)

(75,000)

2,000,000

b)

500,000 3,750

(500,000)

(500,000)

1,315,000

0

3,750

2,500,000

24,000

(60,000)

100,000 (60,000)

2,440,000

540,000

24,000

Shareholders Equity Section:

Paid In Capital Authorized preference share, 2,000 shares at P100 par Less Unissued Issued and Outstanding Preference Share, 6,850 Authorized Ordinary Share, 50,000 at P50 stated value Less: Unissued Ordinary shares, 35,000 shares Issued and Outstanding Ordinary Shares, 1,200 Subscribed Ordinary Shares Less Subscription Recble Additional Paid In Capital: Preference Share Premium Paid In Capital in excess of Stated Value –Ordinary Total Paid In Capital Retained Earnings Total Shareholders’ Equity

P2,000,000 1,315,000 P 685,000 P2,500,000 2,440,000 P60,000 P665,000 256,975

408,025 3,750 24,000

c) Legal Capital: Preference Share, issued and outstanding Ordinary shares issued and outstanding Subscribed ordinary shares Paid in Capital in excess of stated value Total Legal Capital Ex 4.

27,750 P1,180,775 10,000 P1,190,775

P 685,000 60,000 665,000 24,000 P1,434,000

Due from Highest Bidder Subscription Receivable-Ordinary Shares Cash

38,333

Cash Due from Highest Bidder Interest Income (33,333 x .18 /12= 500 per mo / 2)

18,433

Subscribed Ordinary Shares Ordinary Share Capital

P 468,025

33,333 5,000 38,333 250 100,000 100,000

Two Certificates: Rex for 1,500 shares and Adela for 500 shares Ex. 5. Ordinary Treasury Shares Due form Highest Bidder

18,333

Subscribed Ordinary Shares Ordinary Shares

40,000

18,333 40,000

6. Journal Entries: 2018 Jan 1

Authorized to issue 50,000 common shares at P100 par value Subscription Receivable-Ordinary

1,250,000

85,000 10,000

Subscribed Ordinary Share Capital Ordinary Share Premium

46

1,000,000 250,000

Ma31

31

7. a) June 10

12

Cash Subscription Receivable- Ordinary Shares

312,500

Cash Subscription Receivable- Ordinary Shares

468,750

Cash Subscription Receivable-Ordinary Shares

445,312.5

312,500

468,750

445,312.5

Subscribed Ordinary Share Capital Ordinary Share Capital

950,000

Due from Highest Bidder Subscription Receivable – Ordinary Cash

24,812.5

Cash Due from Highest Bidder

24,812.5

950,000

23,437.5 1,375 24,812.5

Subscribed Ordinary Share Capital Ordinary Share Capital

50,000

Treasury Shares Cost (500 x P80) Cash Reacquired 500 shares.

40,000

50,000 40,000

Cash (50 x 75) Retained Earnings (50 x 5) Treasury Shares (50 x 80) 15

20

25

3,750 250 4,000

Cash (100 x 100) Treasury Shares (100 x P80) Additional Paid In Capital – Treasury Shares

10,000

Cash (150 x P70) Additional Paid In Capital-treasury shares Retained Earnings Treasury Shares (150 x P80)

10,500 2,000 500

Ordinary Share Capital (100 x P100) Treasury Shares (100 x P80) Additional Paid In Capital – Stock retirement

10,000

8,000 2,000

12,000

8,000 2,000

Shareholders’ Equity Ordinary Shares, par 100, issued 9,900 of which 100 shares are in the treasury Share Premium Paid In Capital from Stock Retirement Retained Earnings Free P1,191,250 Appropriated for Treasury Shares 8,000 Total Less Treasury Shares (100 shares) Ex. 8. Aug 12

Aug 20

Aug 31

P990,000 50,000 2,000

1,199,250 2,241,250 (8,000) P2,233,,250

P210,000 /3,500= P60 treasury cost Cash (1,500 x 55) Retained Earnings Treasury Shares (1,500 x 60)

82,500 7,500

Cash (1,500 x 62) Paid In Capital from Treasury Shares Treasury Shares (1500x P60)

93,000

Ordinary Shares (500 x 50) Share Premium Paid in Capital from Treasury Shares Treasury Shares

25,000 3,378 1,622

90,000 3,000 90,000

30,000...