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M3P2
M3P2
Contributed capital
Nathaniel Corporation is authorized to issue 100,000 ordinary shares, P17 par value. At the
beginning of 2012, 18,000 ordinary shares were issued and outstanding. These shares had been
issued at P24. During 2012, the company entered into the following transactions:
Jan. 16 - Issued 1,300 ordinary shares at P25 per share.
Mar. 21 - Exchanged 12,000 ordinary shares for a building. The ordinary shares were selling at
P27 per share.
May-07 - Reacquired 500 ordinary shares at P26 per share to be held in treasury.
July 1 - Accepted subscriptions to 1,000 ordinary shares at P28 per share. The contract called for
10% down payment with the balance due on December 1.
Sept. 20 - Sold 500 treasury shares at P29 per share.
Dec. 1 - Collected the balance due on July 1 subscriptions and issued the shares.
REQUIRED:
Compute for the total contributed capital for December 31, 2012. INVESTED CAPITAL
INCLUDING EXCESS OVER PAR
22,100 10,400
204,000 120,000
17,000 11,000
CONTRIBUTED CAPITAL
W/ PAR Ordinary Shares 549,000
W/O PAR SP-OS 267,400
SP-TS 1,500
818,000
2. Poodle Corporation was organized on January 3, 2011. The firm was authorized to issue
100,000 shares of $5 par common stock. During 2011, Poodle had the following transactions
relating to shareholders' equity:
3. Share premium
Hello Corporation was organized on January 1, 2013, with an authorization of 1,000,000
ordinary shares with a par value of P5 per share.
During 2013, the corporation had the following equity transactions:
Jan. 4 - Issued 200,000 shares @ P5 per share.
April 8 - Issued 100,000 shares @ P7 per share.
June 9 - Issued 30,000 shares @ P10 per share
July 29 - Purchased 50,000 shares @ P4 per share.
Dec. 31 - Sold 50,000 shares held in treasury @ P8 per share.
REQUIRED:
What should be the total Share Premium as of December 31, 2012?
Jan 4 5 -5 = 0 -
Apr 8 100,000 x 2 = 200,000 200,000
Jun 9 30,000 x 5 = 150,000 150,000
Jul 29 4-5 = Null -
Dec 31 50,000 x 4 = 200,000 200,000
550,000
4. Comprehensive
The following transactions relate to the stockholders' equity transactions of Monique
Corporation for its first year of existence.
Jan. 7 Articles of incorporation are filed with the Philippine SEC. SEC authorized
the issuance of 10,000 shares of P50 par value preferred stock and 200,000 shares
of P10 par value common stock.
Jan. 28 40,000 shares of common stock are issued for P14 per share.
Feb. 3 80,000 shares of common stock are issued in exchange for land and
buildings that have an appraised value of P250,000 and P1,000,000, respectively.
The stock traded at P15 per share on that date on the over-the-counter market.
Feb. 24 2,000 shares of common stock are issued to Specter and Ross, Attorneys-
at-Law, in payment for legal services rendered in connection with incorporation.
The company charged the amount to organization costs. The market value of the
stock was P16 per share.
Sep. 12 Received subscriptions for 10,000 shares of preferred stock at P53 per
share. A 40 percent down payment accompanied the subscriptions.
Oct. 1 Reacquired 5,000 ordinary shares for a total cost of P80,000
Nov. 5 Reissued 3,000 ordinary shares at P18 per share.
Dec. 10 Shareholders holding an aggregate of 5,000 shares donated their shares to
Monique. The company was able to reissue them at P12 per share.
Dec. 31 Profit and loss summary to be closed to retained earnings amounted to
P300,000 (credit).
REQUIRED:
1. Prepare journal entries to record the foregoing transactions.
Jan 7 The company was authorized to issue 10,000 preferred stock, P50 par value and
200,000 common stock, P10 par value.
Jan 28 Cash (40,000 x 14) 560,000
Common Stock (40,000 x 10) 400,000
SP-CS 160,000
Feb 3 Land 240,000
Building 960,000
Common Stock (80,000 x 10) 800,000
SP-CS 400,000
Feb 24 Organization Cost (2,000 x 16) 32,000
Common Stock (2,000 x 10) 20,000
SP-CS 12,000
Sep 12 Cash 212,000
Subscription Receivable 318,000
Subscribed Preferred Stock (10,000 x 50) 500,000
SP-PS 30,000
Oct 1 Treasury Share (5,000 x 16) 80,000
Cash 80,000
Nov 5 Cash (3,000 x 18) 54,000
Treasury Share (3,000 x 16) 48,000
SP-TS 6,000
Dec 10 Cash (5,000 x 12) 60,000
SP- Donated Capital 60,000
Dec 31 P/L Summary / Inc. and Exp. Summary 300,000
Retained Earnings 300,000
5. Comprehensive
Casio Corp. registered with SEC and was authorized to issue 120,000 ordinary shares at
P15 par value per share. During the first year of operations, 40,000 shares were sold at P28
per share. 600 shares were issued in payment of a current operating debt of P18,600. In the
first year, the net income was P142,000.
During the year, dividends of P36,000 were paid to shareholders. At the end
of the year, total liabilities were P82,000. Use the given data to compute the
following items at the end of the first year (show all computations):
REQUIRED:
(1) Total liabilities and shareholders' equity
82,000 + 1,244,600 = 1,326,600
(2) Shareholders' equity
40,000 x 28 + 124,600 = 1,244,600
(3) Contributed capital
1,138,600
(4) Issued share capital (par)
609,000
(5) Outstanding share capital (par)
609,000
(6) Unissued share capital (number of shares)
79,400
(7) Share premium
529,600
6. (Treasury Shares)
Requirements:
Presented below is the Shareholders’ Equity of Wilco Corporation beginning of the year:
Requirements:
b. Preference Shares
Problem 6
On January 1, 2019, Penn Company began operations by issuing at P15 per share one-half
of the 950,000 ordinary shares of P1 par value that had been authorized for issue.
In addition, the entity had 500,000 authorized preference shares of P5 par value.
During 2019, the entity had P1,025,000 of net income and declared P230,000 of dividend.
During 2020,the entity had the following transactions:
· Issued 100,000 ordinary shares for P 17 per share.
· Issued 150,000 preference shares for P8 per share.
· Authorized the purchase of a custom-made machine to be delivered in January 2021 .
The entity restricted P300,000 of retained earnings for the purchase of the machine.
· Issued additional 50,000 preference shares for P9 per share.
· Reported P 1,215,000 of net income and declared on December 31,2020 a dividend
of P635,000 to shareholders of record on January 15,2021to be paid on February 1,2021.
Problem 7 SHE
Newton Company was organized on January 1, 2019. On that date, it issued 200,000
ordinary shares of P 10 par value at P15 per share. The entity was authorized to issue
400,000 ordinary. shares.
During the period January 1,2019 through December 31,2020, the entity reported net
income of P750,000 and paid cash dividend of P380,000.
On January 5, 2020, the entity purchased 12,000 ordinary shares at P12 per share.
On December 31, 2020,8,000 treasury shares were sold at P8 per share and the remaining
treasury shares were retired. The entity used the cost method of accounting for treasury
shares,
What amount should be reported as total shareholders' equity on December 31,2020?
3,290,000