Two Classes of Shares

Cavite Corporation was organized on June 1, 2009 with authorized

share capital of 400,000, 9% preference shares with P40 par value The shareholders equity section of Batangas Corporation Statement of Financial
and 500,000 ordinary shares with P30 par value. During 2012, the Position at the end of its first year of operation appears as follows:
following selected transactions were completed.
7% Preference Share Capital, P100 par value,
Aug 5 Received subscriptions for 300,000 ordinary shares at P42.A
100,000 shares authorized……………………….. P 7,500,000
down payment of 20% was received; balance in two equal
installments due September 1 and December 1. Ordinary Share Capital, P50 par value,
500,000 shares authorized………………………. 12,500,000
7 Issued 16,500 ordinary shares for cash at an issue price of
P32 per share. Share Premium:
Preference Shares ……………. P 262,500
9 Subscriptions were received for 120,000 preference shares at Ordinary Shares………………. 1,750,000 2,012,500
P45; collected 15% down payment with the balance in two
equal installments due October 1 and December 1. Accumulated Profits 3,260,000

Sept 1 Amounts due on this date were collected from ordinary share Total Shareholders’ Equity P25,272,500
subscribers. ===========
Required:
5 Issued 500 preference shares for cash at an issue price of On the basis of the above information, answer the following questions and show
P45 per share. necessary supporting computations:

Oct 1 Amounts due on this date were collected from preference

a. How much was the minimum subscription and paid-up capital of the
share subscribers.
corporation required by law before they were incorporated.?
Nov 1 Issued 600 preference shares for cash at P44. b. How many preference shares have been issued?
c. How many ordinary shares have been issued?
Dec 1 Amounts due on this date were collected from ordinary and
preference subscribers. d. What was the issue price per share of preference shares?
e. What was the issue price per share of ordinary shares?
Required: Prepare journal entries to record the foregoing share capital f. What is the total amount of legal capital ?
g. What is the total amount of contributed capital.

.
No Par Value Shares b. the share has a stated value of P10.00 per share
The India Co. sells its authorized share capital of 500,000 shares at P11.00 per share. c. the share has a stated value of P5.00 per share.
What entries will be made to record the sale assuming that:
a. the share has no par value.
. No Par Value Shares P18,600. Net income
earned during the first
The Lapena Corporation was organized on January 1, 2013 and is authorized to issue 100,000 year amounted to
shares of ordinary share capital, no par with a stated value of P10 per share. P142,000.

The following transactions took place during January: a. Determine the amount of contributed capital.
b. Determine the number of unissued shares .
Jan 1 Issued to incorporators 25,000 ordinary shares at stated
value in exchange for cash. 5-2. The share capital
transactions of Apple
10 Received subscription for 10,000 ordinary shares at P12.50 per share with a 30% cash Corporation resulted
down payment. in the following:
22 Issued 50,000 ordinary shares in exchange for the following: Unissued Share
Capital, P120,000;
Fair Market Value
Authorized Share
Land P 350,000 Capital, P300,000;
Equipment 100,000 Share Premium,
Merchandise inventory 95,000 P8,000; Subscriptions
25 Received the balance of the subscription; shares were issued to the subscribers. Receivable, P32,000
30 The remaining ordinary shares were sold at P14 per share. and Subscribed Share
Capital, P60,000.
Required: Journalize the foregoing transactions.
What amount of cash was collected from the share capital
transactions?

5-3. Orange
Corporation
was
incorporated
on January
1, 2013 with
following
authorized
PROBLEM SOLVING
capitalizatio
Solve the following problems. Write your solutions in good n:
accounting form and double rule your final answer. a. 40,000
ordinary shares
a. Mango Corporation received a charter authorizing 120,000 shares
, no par value,
of ordinary share capital at P15 par value per share. During the first
stated value of
year of operations, 40,000 shares were sold at P25 per share and 600
P40 per share.
shares were issued in exchange for equipment with a market value of
b.10,000 preference shares, par value of P10 per share.
c. During 2013, Orange issued 24,000 ordinary shares for a total 54
of P1,200,000 and 6,000 preference shares at P16 per share. In
addition, on December 20, 2013, subscription for 2,000
preference shares was made at a purchase price of P17.

What should Orange Corporation report as total

contributed capital on its December 31, 2013 statement of
financial position?