Title | Chapter-8 - Accounting Chapter 8 Corporation |
---|---|
Course | Accountancy |
Institution | Polytechnic University of the Philippines |
Pages | 10 |
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CHAPTER 8 Organization and Formation of a Corporation E a. Memorandum entry method Jan. 1 Authorized to issue shares of preference share capital with a par value of P100. May Dec. 1 Authorized to issue shares of ordinary share capital with a stated value of P20. 1 Cash Preference Share Capital (62,5...
CHAPTER 8 Organization and Formation of a Corporation E 8-1 a. Memorandum entry method Jan. 1 Authorized to issue 250,000 shares of 10% preference share capital with a par value of P100.
May
Dec.
1
Authorized to issue 500,000 shares of ordinary share capital with a stated value of P20.
1
Cash Preference Share Capital (62,500 x P100) Ordinary Share Capital (125,000 x P20) Ordinary Share Capital in Excess of Stated Value
9,375,000
Cash Preference Share Capital (25,000 x P100) Preference Share Premium
3,000,000
1
1
Cash Ordinary Share Capital (25,000 x P20) Ordinary Share Capital in Excess of Stated Value
b. Journal entry method Jan. 1 Unissued Preference Share Capital Authorized Preference Share Capital 1
1
May
Dec.
1
1
Unissued Ordinary Share Capital Authorized Ordinary Share Capital
6,250,000 2,500,000 625,000 2,500,000 500,000 600,000 500,000 100,000
25,000,000 25,000,000 10,000,000 10,000,000
Cash Unissued Preference Share Capital Unissued Ordinary Share Capital Ordinary Share Capital in Excess of Stated Value
9,375,000
Cash Unissued Preference Share Capital Preference Share Premium
3,000,000
Cash Unissued Ordinary Share Capital Ordinary Share Capital in Excess of Stated Value
6,250,000 2,500,000 625,000 2,500,000 500,000 600,000 500,000 100,000
APC – Chapter 8 (2007 edition)
page 2
E 8-2 a. Memorandum entry method Apr. 1 Authorized to issue 500,000 shares of ordinary share capital with a par value of P20. 1
May
Cash Ordinary Share Capital (200,000 x P20) Ordinary Share Premium
4,000,000 3,200,000
25 Pre-Operating Expenses Ordinary Share Capital (5,000 x P20) Ordinary Share Premium
150,000
28 Equipment Ordinary Share Capital (15,000 x P20) Ordinary Share Premium
400,000
b. Journal entry method Mar. 1 Unissued Ordinary Share Capital Authorized Ordinary Share Capital 1
Apr.
7,200,000
100,000 50,000
300,000 100,000
10,000,000 10,000,000
Cash Unissued Ordinary Share Capital Ordinary Share Premium
7,200,000
25 Pre-Operating Expenses Unissued Ordinary Share Capital Ordinary Share Premium
150,000
28 Equipment Unissued Ordinary Share Capital Ordinary Share Premium
400,000
4,000,000 3,200,000
100,000 50,000
300,000 100,000
E 8-3 1. Authorized to issue 500,000 shares of ordinary share capital with a par value of P20 Cash Ordinary Share Capital (250,000 x P20) Ordinary Share Premium (250,000 x P5) 2.
5,000,000 1,250,000
Authorized to issue 500,000 shares of Ordinary Share Capital with a stated value of P15. Cash Ordinary Share Capital (250,000 x P15) Ordinary Share Capital in Excess of Stated Value
3.
6,250,000
6,250,000 3,750,000 2,500,000
Authorized to issue 500,000 shares of no-par and no stated value Ordinary Share Capital. Cash Ordinary Share Capital (250,000 x P25)
6,250,000 6,250,000
APC – Chapter 8 (2007 edition)
page 3
E 8-4 Authorized to issue 500,000 shares of ordinary share capital with a stated value of P20. a.
b.
c.
d.
e.
Cash Ordinary Share Capital (125,000 x P20) Pre-Operating Expenses Ordinary Share Capital (2,500 x P20) Ordinary Share Capital in Excess of Stated Value Note: shares issued should be 2,500 and NOT 25,000
2,500,000 2,500,000 150,000 50,000 100,000
Pre-Operating Expenses Ordinary Share Capital (2,000 x P20) Ordinary Share Capital in Excess of Stated Value
50,000
Land Ordinary Share Capital (10,000 x P20) Ordinary Share Capital in Excess of Stated Value
300,000
Cash (50,000 x P24) Ordinary Share Capital (50,000 x P20) Ordinary Share Capital in Excess of Stated Value
1,200,000
E 8-5 June
1
1
Sept.
8
8
E 8-6 July
1
8
40,000 10,000
200,000 100,000
1,000,000 200,000
OSC Subscription Receivable (35,000 x P50) OSC Subscribed (35,000 x P20) Ordinary Share Premium (35,000 x P30)
1,750,000
Cash (P1,750,000 x 60%) OSC Subscription Receivable
1,050,000
Cash OCS Subscription Receivable
700,000
OSC Subscribed Ordinary Share Capital
700,000
Cash Ordinary Share Capital (125,000 x P10) Preference Share Capital (12,500 x P100) Ordinary Share Capital in Excess of Stated Value Pre-Operating Expenses (1,250 x P120) Preference Share Capital (1,250 x P100) Preference Share Premium (1,250 x P20)
12 OSC Subscription Receivable (75,000 x P20) OSC Subscribed (75,000 x P10) Ordinary Share Capital in Excess of Stated Value
700,000 1,050,000
1,050,000
700,000
700,000
3,125,000 1,250,000 1,250,000 625,000 150,000 125,000 25,000 1,500,000 750,000 750,000
APC – Chapter 8 (2007 edition)
July
E 8-7 Sept.
page 4
12 Cash OSC Subscription Receivable P1,500,000 x 60% = P900,000
900,000
21 Merchandise Inventory Land Building Equipment Ordinary Share Capital (20,000 x P10) Ordinary Share Capital in Excess of Stated Value
10,000 150,000 100,000 20,000
30 Cash (P1,500,000 – P900,000) OSC Subscription Receivable
600,000
30 OSC Subscribed Ordinary Share Capital
750,000
1
1
8
900,000
200,000 80,000
600,000
750,000
OSC Subscription Receivable (125,000 x P30) OC Subscribed (125,000 x P20) Ordinary Share Premium (125,000 x P10)
3,750,000
Cash (P3,750,000 x 40%) OSC Subscription Receivable
1,500,000
Land Ordinary Share Capital (25,000 x P20) Ordinary Share Premium
2,500,000 1,250,000
1,500,000 750,000 500,000 250,000
10 Cash OSC Subscription Receivable P2,200,000 / 3 = P750,000
750,000
20 Cash OSC Subscription Receivable
750,000
30 Cash OSC Subscription Receivable
750,000
30 OSC Subscribed Ordinary Share Capital E 8- 8 a. OSC Subscription Receivable (125,000 x P25) OSC Subscribed (125,000 x P10) Ordinary Share Capital in Excess of Stated Value Cash (P3,125,000 x 60%) OSC Subscription Receivable
750,000
750,000
750,000 2,500,000 2,500,000
3,125,000 1,250,000 1,875,000 1,875,000 1,875,000
APC – Chapter 8 (2007 edition)
b.
c.
d.
e.
f.
page 5
Cash (50,000 x P25 x 40%) OSC Subscription Receivable
500,000
OSC Subscribed Ordinary Share Capital (50,000 x P10)
500,000
Cash (60,000 x P25 x 40%) OSC Subscription Receivable
600,000
OSC Subscribed Ordinary Share Capital (60,000 x P10)
600,000
Receivable from Highest Bidder OSC Subscription Receivable 15,000 sh x P25 x 40% = P150,000
150,000
Receivable from Highest Bidder Cash
500,000
500,000
600,000
600,000
150,000
50,000 50,000
Cash Receivable from Highest Bidder
200,000
OSC Subscribed Ordinary Share Capital (15,000 x P10)
150,000
P 8-1 Aug.
200,000 150,000
1
Authorized to issue 50,000 shares of P100 par value preference share capital.
1
Authorized to issue 500,000 shares of P20 par value ordinary share capital.
2
PSC Subscription Receivable (15,000 x P120) PSC Subscribed (15,000 x P100) Preference Share Premium (15,000 x P20)
2
2
Cash PSC Subscription Receivable P1,800,000 x 30% = P540,000
1,800,000 1,500,000 300,000 540,000 540,000
OSC Subscription Receivable (175,000 x P30) OSC Subscribed (175,000 x P20) Ordinary Share Premium (175,000 x P10)
5,250,000
Cash (5,250,000 x 20%) OSC Subscription Receivable
1,050,000
30 Cash (P1,800,000 x 30%) PSC Subscription Receivable
540,000
31 Cash (100,000 x P30 x 80%) OSC Subscription Receivable
2,400,000
2
3,500,000 1,750,000
1,050,000 540,000
2,400,000
APC – Chapter 8 (2007 edition)
31 OSC Subscribed Ordinary Share Capital (100,000 x P20)
Sept.
2,000,000 2,000,000
31 Cash (75,000 x P30 x 40%) OSC Subscription Receivable
900,000
21 Cash PSC Subscription Receivable 11,000 sh x P120 x 40% = P528,000
528,000
21 PSC Subscribed Preference Share Capital (11,000 x P100)
P 8-2 Nov.
page 6
900,000
528,000 1,100,000 1,100,000
21 Receivable from Highest Bidder PSC Subscription Receivable 4,000 sh x P120 x 40% = P192,000
192,000
28 Cash Receivable from Highest Bidder
192,000
28 PSC Subscribed Preference Share Capital (4,000 x P100)
400,000
30 Cash OSC Subscription Receivable 75,000 sh x P30 x 40% = P900,000
900,000
192,000
192,000
400,000 900,000
30 Ordinary Share Capital Subscribed Ordinary Share Capital (75,000 x P20)
1,500,000
2
OSC Subscription Receivable (50,000 x P60) OSC Subscribed (50,000 x P50) Ordinary Share Premium (50,000 x P10)
3,000,000
Cash (P3,000,000 x 40%) OSC Subscription Receivable
1,200,000
2
5
Equipment Ordinary Share Capital (10,000 x P50) Ordinary Share Premium
16 OSC Subscription Receivable (30,000 x P60) OSC Subscribed (30,000 x P50) Ordinary Share Premium (30,000 x P10)
1,500,000
2,500,000 500,000
1,200,000 700,000 500,000 200,000 1,800,000 1,500,000 300,000
16 Cash (P1,800,000 x 20%) OSC Subscription Receivable
360,000
28 Cash (35,000 x P60 x 60%) OSC Subscription Receivable
1,260,000
360,000
1,260,000
APC – Chapter 8 (2007 edition)
Dec.
page 7
28 OSC Subscribed Ordinary Share Capital (35,000 x P50)
1,750,000
16 Cash OSC Subscription Receivable 25,000 sh x P60 x 80% = P1,200,000
1,200,000
16 OSC Subscribed Ordinary Share Capital (25,000 x P50)
1,250,000
16 Receivable from Highest Bidder OSC Subscription Receivable 5,000 sh x P60 x 80% = P240,000
4.
15,000 15,000
26 Cash Receivable from Highest Bidder
255,000
26 OSC Subscribed Ordinary Share Capital (5,000 x P50)
250,000
255,000
250,000
90,000 90,000
Accumulated Depreciation Equipment Capital Adjustment Account
160,000
Capital Adjustment Account Goodwill
100,000
Goodwill Capital Adjustment Account FMV of OS issued (14,000 sh@P70) Adj. NA, excluding cash
156,000
(P112,000+P296,000+P520,000-P104,000)
Goodwill 5.
1,250,000
240,000
P 8-3 Partnership Books 1. Inventories Capital Adjustment Account
3.
1,200,000
240,000
20 Receivable from Highest Bidder Cash
2.
1,750,000
Capital Adjustment Account Bautista, Capital (3/4) Bernaldo, Capital (1/4)
80,000 80,000
100,000
156,000 P980,000 824,000 P156,000 226,000 169,500 56,500
APC – Chapter 8 (2007 edition)
6.
7.
page 8
Rainbow Corp. Stocks Allowance for Doubtful Accounts Accounts Payable Accounts Receivable Inventories Equipment Goodwill
980,000 12,000 104,000
Bautista, Capital Bernaldo, Capital Cash Rainbow Corp. Stocks
563,500 458,500
124,000 296,000 520,000 156,000
42,000 980,000
New Corporation’s Books 1. Authorized to issue 50,000 shares of P50 par value ordinary share capital. 2.
3.
Cash (10,000 x P70) Ordinary Share Capital (10,000 x P50) Ordinary Share Premium (10,000 x P20)
700,000
Accounts Receivable Inventories Equipment Goodwill Allowance for Doubtful Accounts Accounts Payable Ordinary Share Capital Ordinary Share Premium
124,000 296,000 520,000 156,000
P 8-4 1. a. Land Preference Share Capital Preference Share Premium b.
c.
d.
2.
Cash Preference Share Capital Preference Share Premium
500,000 200,000
12,000 104,000 700,000 280,000
150,000 100,000 50,000 35,000 25,000 10,000
Pre-operating Expenses Ordinary Share Capital Ordinary Share Premium
5,400
Cash Ordinary Share Capital Ordinary Share Premium
78,000
PS = P125,000 /P50 par = 2,500 shares OS = P 64,000 / P5 par = 12,800 shares
4,000 1,400
60,000 18,000
APC – Chapter 8 (2007 edition)
page 9
P 8-5 1. Total preference shares issued (P1,000,000/P50 par) PS issued for equipment PS issued for cash 2.
20,000 sh 10,000 10,000 sh
Preference share premium Premium from issuance in exchange for equipt. (P550,000 – P500,000) Share premium from issuance for cash
P120,000 50,000 P 70,000
Issuance price per share = P50 + (P70,000/10,000)
P 57
3.
OSC issued = P3,000,000/P10
300,000 sh
4.
Issuance price per share = P7,500,000/300,000 sh
P25.00
5.
PIC from issuance of PS for equipment
P50,000
P 8-6 1. P1,440,000/ P50 = 28,800 shares 2. P1,360,000/P10 = 136,000 shares 3. P720,000 / P50 = 14,400 shares 4. P280,000/P10 = 28,000 shares 5. (P2,160,000 + P216,000) / (28,800 + 14,400) = P55 6. (P1,640,000 + P328,000) / (136,000 + 28,000) = P12 7. P360,000 / 14,400 shares = P25 8. P12 – (P182,000/28,000 sh) = P5.50 Multiple Choice 8-1 D 8-2 A 8-3 D 8-4 C 8-5 A 8-6 D 8-7 D 8-8 D 8-9 B 8-10 D 8-11 B 8-12 A 8-13 A 8-14 A 8-15 D TM 28 1. T 2. F 3. F 4. T 5. F
25,000 sh x P24 x 25% = P150,000 4,000 sh x P110 x 25% = P110,000 2,000 sh x P17 = P34,000 (25,000 + 1,000 + 5,000) x P20 = P620,000 (25,000 x P2) + (1,000 x P4) + (5,000 x P6) = P84,000 (P900,000 – P750,000) + (P100,000 x P15) + (5,000 x P5) = P1,675,000 [(50,000 + 50,000 +100,000) x P15] + (5,000 x P50) + P1,675,000 = P4,925,000 (100,000 x P30) + (3,000 x P50) =3,150,000 (7,500 + 6,000 x P4) = P54,000
6. 7. 8. 9. 10.
T F F T T
11. T 12. T 13. F 14. F 15. T
16. 17. 18. 19. 20.
F T T F F
21. 22. 23. 24. 25.
T T T F T
APC – Chapter 8 (2007 edition)
page 10
TM 29 1. Corporation 2. Incorporation 3. Domestic corporation 4. Incorporators 5. Pre-operating costs/organization costs 6. Stated value 7. Ordinary share capital 8. Preference share capital 9. Par value 10 Ordinary share capital TM 30 1. C 2. C 3. D 4. C
5. C 6. A 7. B 8. D
9. 10. 11. 12.
11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
A B B C
Outstanding share capital Delinquent subscriber 25% 25% Paid-in capital in excess of stated value P5.00 50 years Stock certificate Receivable from highest bidder Goodwill
13. C 14. B 15. C 16. B
17. D 18. A 19. C 20. D
TM 31 Problems A.
1. 2. 3. 4. 5.
P50,000 P55 500,000 sh P15 P50,000
P60,000 (total) – P10,000 (land) = P50,000 P2,750,000 / 50,000 sh = P55 P5,000,000 / P10 = 500,000 sh P7,500,000 / 500,000 sh = P15 P550,000 – (10,000 sh x P50) = P50,000
B.
1. 2. 3. 4. 5.
P100 / 325 sh P70,000 P50,000 P2,460,000 P64,000
P42,250/P130 = 325 shares; P32,500/325 sh = P100 P120,000 – (1,000 x P50) = P70,000
C. 1. 2. 3. 4. 5. 6. 7. 8.
57,600 sh 272,000 sh 28,800 sh 56,000 sh P55 P12 P25 P5.50
(24,000 sh x P60) + (6,000 sh x P120) + (2,000 sh x P150) 8,000 sh x P8 = P64,000
P2,880,000 / P50 P2,720,000 / P10 P1,440,000 / P50 P560,000 / P10 (P4,320,000 + P432,000) / (57,600 + 28,800) = P55 (P3,280,000 + P656,000) / (272,000 + 568,000) = P12 P720,000 / 28,800 = P25 P12 – (P364,000/56,000)...