Solutions to Chapter 7 Exercise 1 a) Aug. 1
Aug. 5
Aug. 10
Aug. 12
Aug. 30
Sept. 1
Sept. 30
Authorized to issue 100,000 8% preference shares at P100 par and 100,000 ordinary shares at P50 par. Subscription Receivable-Ordinary share Subscribed Ordinary Share Capital
3,000,000
Cash Subscription Receivable-Ordinary Share
1,000,000
Subscription Receivable-Preference Share Subscribed Preference Share Capital Cash Subscription Receivable-Preference Share
4,000,000
Cash Ordinary Share Capital Ordinary Share Premium
1,060,000
3,000,000
1,000,000
4,000,000 2,000,000 2,000,000
1,000,000 60,000
Equipment Preference Share Capital Preference Share Premium
700,000 500,000 200,000
Cash Subscription Receivable-Preference Share
2,000,000
Subscribed Preference Share Capital Preference Share Capital
4,000,000
Cash Subscription Receivable-Ordinary Share Capital
1,000,000
2,000,000
4,000,000
1,000,000
Cash Subscription Receivable-Ordinary Share
958,333 958,333
Subscribed Ordinary Share Capital Ordinary Share Capital
2,875,000 2,875,000
b) Preference Shares: Authorized to issue 100,000 preference shares par P100 Issued 90,000 shares Ordinary Shares: Authorized to issue 100,000 ordinary shares par P50 Issued 38,750 shares Subscribed 2,500 shares Additional Paid In Preference Share Premium Ordinary Share Premium Total Paid In
P4,500,000
3,875,000 125,000 200,000 60,000 P4,260,000
Ex .2 a) 2012 May1
Authorized to issue 50,000, 18% Cumulative Preference shares at P100 per share Authorized to issue 200,000 ordinary shares At P50 per share Subscription Receivable-Preference Shares (2,500 xP100 x 6) Subscribed Preference Share Capital To record common stock subscription of incorporators.
1,500,000
Subscription Receivable- Ordinary Shares (10,000 x P50 x 6) Subscribed Ordinary Share Capital To record common stock subscription of incorporators.
3,000,000
43
1,500,000
3,000,000
Cash Subscription Receivable-Preference Share(1,500,000 x .25) Subscription Receivable-Ordinary Share (3,000,000 x .25) To record downpayment of incorporators. June 15
17
30
July 1
15
18
20
30
375,000 750,000
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
500,000 50,000
137,500
Subscription Receivable-Ordinary Share(30,000 x P52) Subscribed Ordinary Share Capital Ordinary Share Premium
1,560,000 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 1,687,500 562,500 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
562,500 187,500 375,000
Subscribed Preference Share Subscribed Ordinary Share Preference Share Capital Ordinary Share Capital
500,000 1,000,000
Cash Subscription Receivable-Preference Share Subscription Receivable-Ordinary Share
1,125,000
Subscribed Preference Share Capital Subscribed Ordinary Share Capital Preference Share Capital Ordinary Share Capital
1,000,000 2,000,000
Preference Share 5/1 6/15 6/17 7/1 7/18 7/20 7/30
1,125,000
500,000 1,000,000
Subscribed Preference 1,500,000 500,000
Pref Share Premium
0
375,000 750,000
1,000,000 2,000,000
Ordinary Share
Subscribed Ordinary Shares 3,000,000
Ordinary Share Premium
50,000 1,500,000 70,000 1,000,000 2,000,000
(500,000) (1,000,000)
P1,500,000
500,000 1,000,000
P50,000
P4,570,00 0
Legal Capital P6,070,000
44
1,500,000 (1,500,000)
60,000 5,000
(1,000,000) (2,000,000) P65,000
Shareholders’ Equity| Paid In Capital Authorized 50,000 18% cumulative preference shares, at P100 par Issued and Outstanding Preference Share, 1,500
P1,500,000
Authorized 200,000 common shares, at P50 par Issued and Outstanding Ordinary Shares, 45,700
4,570,000
Additional Paid In Capital: Premium on Preference Shares Premium on Ordinary Shares Total Paid In Capital
50,000 65,000
Ex. 3. a) Journal entries: Jan 15 Unissued preference share (20,000 x P100) Authorized Preference share capital
2,000,000 2,000,000
Unissued Ordinary Share (50,000 x P50) Authorized Ordinary Share 20
30
Feb 21
25
Mar 1
10
28
31
115,000 P6,185,000
2,500,000 2,500,000
Cash (13,000 x P60) Unissued Ordinary Share (13,000 x P50) Paid in Capital in excess of stated value-ordinary share
780,000
Subscription Receivable – preference share (5,000xP100) Subscribed preference share
500,000
Cash Subscription Receivable – preference share
250,000
650,000 130,000
500,000
250,000
Cash (750 x P105) Unissued preference share (750 x P1000 Preference Share Premium
78,750 75,000 3,750
Land (P50,000 x 2.20) Unissued preference share (1,100 x P100)
110,000 110,000
Organization Expense Cash
75,000 75,000
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
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
Cash Subscription Receivable – ordinary share
22,600
Subscribed ordinary share (800 x P50) Unissued ordinary share
40,000
Income & expense summary Retained earnings
81,000
31,000
70,400
60,000
22,600
40,000
81,000
b) Shareholders Equity Section: Paid In Capital Authorized preference share, 2,000 shares at P100 par Less Unissued Issued and Outstanding Preference Share, 1,750 Subscribed Preference Share
45
P2,000,000 185,000 P1,815,000 P500,000
Less: Subscription Receivable – Preference Share
250,000
Authorized Ordinary Share, 50,000 at P50 stated value Less: Unissued Ordinary shares, 35,000 shares Issued and Outstanding Ordinary Shares, 15,000 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 c) Legal Capital: Preference Share, issued and outstanding Subscribed Preference Share Ordinary shares issued and outstanding Paid in Capital in excess of stated value Total Legal Capital Ex 4. Subscription Receivable – ordinary share (5,000 x P58) Subscribed ordinary share (5,000 x P50) Paid in capital in excess of stated value-ordinary
250,000
P2,065,000
P2,500,000 1,750,000 P 750,000 3,750 154,000
167,750 P2,982,750 81,000 P3,063,750
P 1,815,000 500,000 750,000 154,000 P3,219,000 290,000 250,000 40,000
Cash (290,000 x .25) Subscription Receivable – ordinary share
72,500
Cash Subscription Receivable-ordinary shares
108,750
Cash Subscription Receivable-ordinary shares
54,375
72,500
108,750
54,375
Subscribed Ordinary Shares Ordinary Share Capital
125,000 125,000
Due from Highest Bidder Subscription Receivable-Ordinary Shares Cash 54,375 +.18 x 2.5/12) Cash Due from Highest Bidder Interest Income
59,375 54,375 5,000 61,414 59,375 2,039
Subscribed Ordinary Shares Ordinary Share Capital
125,000 125,000
Two Certificates: Jose Villa for 1,000 shares and Adela for 1,500 shares Ex. 5. Ordinary Treasury Shares Due form Highest Bidder
59,375 59,375
Subscribed Ordinary Shares Ordinary Shares
125,000 125,000
6. Journal Entries: 2012 Jan 1 Authorized to issue 50,000 common shares at P100 par value Subscription Receivable-Ordinary Subscribed Ordinary Share Capital Ordinary Share Premium
31
1,250,000 1,000,000 250,000
Cash Subscription Receivable- Ordinary Shares
312,500
Cash Subscription Receivable-Ordinary Shares
890,625
Subscribed Ordinary Share Capital
950,000
46
312,500
890,625
Ordinary Share Capital
7. a) June 10
15
20
25
950,000
Due from Highest Bidder Subscription Receivable – Ordinary Cash
48,250
Cash Due from Highest Bidder
48,250
Subscribed Ordinary Share Capital Ordinary Share Capital
50,000
Treasury Shares Cost (500 x P80) Cash Reacquired 500 shares.
40,000
Cash Treasury Shares (100 x P80) Additional Paid In Capital – Treasury Shares
10,000
46,875 1,375
48,250
50,000
40,000
8,000 2,000
Cash (150 x P60) Additional Paid In Capital-treasury shares Retained Earnings Treasury Shares (150 x P80)
9,000 2,000 1,000 12,000
Ordinary Share Capital (175 x P100) Treasury Shares (175 x P80) Additional Paid In Capital – Stock retirement
17,500 14,000 3,500
Shareholders’ Equity Ordinary Shares, par 100, issued 9,825 of which 100 shares are in the treasury Paid In Capital from Stock Retirement Retained Earnings Free P1,193,000 Appropriated for Treasury Shares 6,000 Total Less Treasury Shares (75 shares) Ex. 8. Aug 12
Aug 20
Aug 31
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
P982,500 3,500
1,199,000 2,185,000 (6,000) P2,179,000
90,000
3,000 90,000
30,000
Shareholders’ Equity: Ordinary Shares, 18,000 issued Share Premium Paid in capital from treasury shares Retained Earnings
P900,000 121,622 1,378 4,492,500
Ex. 9. June 5
30
Preference Share Capital Paid In Capital in Excess of Par Retained earnings Cash
50,000 5,000 20,000
Preference Share Capital Cash Paid In Capital from Stock Retirement
50,000
75,000
47
45,000 5,000
Shareholders’ Equity Redeemable Preference Share, P100 par, 4,000 issued and outstanding Preference Share Premium Paid In Capital from Stock Retirement Retained Earnings Total Shareholders’ Equity 10. NOVA Corp. Journal Entries: a) July 1 Ordinary Share Capital (5,000 x P15) Cash (5,000 x P15) b) Dec. 1
Ordinary Share Capital Cash (4,000 x P8.50)
June 12
75,000
34,000
24,000 24,000
Cash (P14 x 1000) Treasury Shares (1000 x P12) Paid In Capital from Treasury Shares Cash (P11 x 500) Paid in capital – Treasury Shares Treasury Shares (500 x P12)
14,000 12,000 2,000 5,500 500 6,000
July 25
Memorandum entry: received from Shareholders 100 shares as donated stock.
Aug. 1
Cash (P15 x 1000) Paid in Capital from Donated Shares
15,000
Treasury Shares Merchandise Inventory
20,000
Nov. 1
Dec. 5
10
b)
75,000
34,000
11. NINA Corporation: a) journal Entries Mar 10 Treasury Shares Cash (2000 x 12) May 15
P 400,000 45,000 5,000 80,000 P530,000
15,000 20,000
Cash (P15 x 500) Treasury Shares Paid In Capital from Treasury Shares
7,500
Ordinary Shares (P10 x 500) Share Premium Capital (5,00/200,000 x 100,000) Treasury Shares Paid In Capital – Stock Retirement
5,000 2,500
Retained Earnings Appropriated for Treasury Shares
15,000
Retained Earnings Income and Expense Summary
50,000
5,000 2,500
6,000 1,500
15,000
50,000
NINA Corp. Shareholders’ Equity Section As of Dec. 31, _ Capital stock. Par P10,issued 199,500 of which1,500 are in the treasury Additional paid In Capital Share Premium Donated Capital Paid In From treasury Shares Paid in From Stock Retirement Retained Earnings Appropriated for Treasury Shares Unappropriated Total Less Treasury Shares ( 1,500 at cost )
48
P1,995,000
P 97,500 15,000 4,000 1,500 15,000 535,000
118,000
550,000 2,663,000 15,000 P2,648,000
12.
PINOY CORP SHAREHOLDERS’ EQUITY SECTION Dec. 31, 2012 Paid In Capital 18% Preference Share Capital, par value of P100 authorized 10,000 shares, issued and outstanding, 8,000 shares Subscribed Preference Share Capital Less Subscription Receivable, Preference Share
P 800,000 P100,000 40,000
Ordinary Share Capital, no par, authorized 25,000 shares Stated value of P100, issued 15,000 shares of which 1,000 shares are in the treasury Subscribed Ordinary Share Capital P50,000 Less Subscription Receivable, Ordinary share 20,000 Total Additional Paid in Capital Premium on Preference Shares Paid In Capital in Excess of Stated Value Donated Capital
60,000
P1,500,000 30,000
P 10,000 15,000 75,000
Retained Earnings Unappropriated Retained Earnings Appropriated Retained earnings for Treasury Shares Total Less Treasury Shares (at Cost) 1,000 ordinary shares Total Shareholders’ Equity 13.
P 45,000 120,000
Preference Shares 50,000 shares 17,000 shares 33,000 shares 17,000 shares 2,000 shares 31,000 shares*
Authorized number of shares Issued Shares Unissued Shares Issued and outstanding shares Subscribed Shares Still available for subscription Unissued Subscribed
P 860,000
1,530,000 P2,390,000
100,000
165,000 P2,655,000 120,000 P2,535,000
Ordinary Shares 10,000 shares 5,000 shares 5,000 shares 4,500 shares 0 5,000 shares
33,000 2,000 31,000
Legal Capital Preferred Stock, issued Preferred Stock, Subscribed Common Stock, issued Paid in capital in excess of stated value Total
P1,700,000 200,000 500,000 55,000 P2,455,000
14. 1) Journal Entries 2014 Jan. 10
Cash Subscription Receivable-Preference Shares Subscribed Preference Share Redeemable preference Share
20
31
Feb 8
75,000 100,000 100,000
Due from highest Bidder Subscription Receivable
75,000 75,000
Due from Highest Bidder Cash 25
75,000
5,500 5,500
Cash Interest Income Due from highest Bidder
81,250 750 80,500
Subscribed Preference Shares Redeemable Preference shars
100,000
Land Redeemable Pref Shares (2,000 x P100) Premium on Preference Shares
250,000
100,000
Cash Treasury Shares Paid In Capital from sale of Treasury Shares
49
200,000 50,000 45,000 36,000 9,000
20
28
March 1
Cash Unissued Ordinary Shares (500 x P100) Paid In Capital In Excess of Stated Value Redeemable Preference Share Capital Premium on Preference share(5/22 x 150,000) Retained Earnings Cash (5,000 x P120) Cash Paid In Capital from Treasury Shares Treasury Shares (100 x P120)
70,000 50,000 20,000 500,000 34,091 65,909 600,000 10,000 2,000 12,000
2) Shareholders’ Equity Section Paid In Capital Redeemable Preferred Stock, par P100, authorized 50,000 shares Authorized Common Stock, P100 stated value Less: Unissued Common Stock Total Additional Paid In Capital Premium on Preferred Stock Paid In Capital in Excess of Stated value Paid In Capital from Treasury Stock Total Less: Treasury Stocks (200 common shares) Total Stockholders’ Equity 3)
P1,600,000 P1,000,000 450,000
P315,909 75,000 7,000
Preference Share 50,000 16,000 34,000 16,000 34,000
Authorized number of shares Issued Shares Unissued shares Issued and outstanding Still available for subscription Legal Capital Preferred Stock, issued Common Stock, issued Paid In Capital in Excess of Stated Value Total
__550,000 P2,150,000
397,909 2,547,909 12,000 P2,535,909
Ordinary Share 10,000 5,500 4,500 5,000 5,000
P1,600,000 550,000 75,000 P2,225,000
CASE PROBLEM 1) Your right over the corporation will decrease 5,000/100,000 or 5% to 5,000/300,000 or 1.67% 2) You have to buy 5% of 200,000 or 10,000 shares. Total shares will be 15,000/300,000 will still be 5%. 3) Option price of P1,250 x 10,000 shares in P12,500,000.
50
