Additional assignment

Problem 1 (Retirement, Conversion and Treasury Shares)

The shareholders’ equity of Adana Publishing Company shows the following balances:

5% Preference Share Capital, P 50 par value,

20,000 issued and outstanding shares P 1,000,000
Ordinary Share Capital, P 20 stated value
100,000 issued and outstanding shares P 2,000,000
Preference Share Premium 300,000
Ordinary Share Premium 400,000
Retained Earnings 1,250,000

The following transactions occurred:

1.     1,000 preference shares were retired at P 78 per share.
2.     Another 800 preference shares were retired at P 62 per share.
3.     2,000 preference shares were converted into ordinary shares with a ratio of 1 PS into 4 shares.
4.     1,500 preference shares were converted into ordinary shares with a ratio of 1 PS into 6 shares.
5.     Reacquired 2,000 ordinary shares at P 23 per share.
6.     Reissued all the treasury shares at P 21 per share.

Requirements:
1.     Prepare the journal entries for the transactions occurred.
2.     Prepare the Shareholders’ Equity at year-end.

Problem 2 (Treasury Shares)

Charity Corporation has the following equity account balances:

Ordinary Share Capital, P 25 par value P 500,000

Additional paid-in capital in excess of par 140,000
Retained Earnings 200,000

On September 2, the corporation reacquired its 5,000 ordinary shares at P 22. On October 27, there are 3,000 reissued tre
reissued at P 18 per share.
Requirements:
Prepare the journal entries for the transactions occurred.

Problem 3 (Share Split and Recapitalization)

On August 4, the capital accounts of Carter Inc. are as follows:

Ordinary Share Capital, P 25 par, 40,000 shares P 1,000,000

Ordinary Share Premium 200,000

Instruction:
Prepare the necessary journal entry to record each of the following independent transactions:
a.     A share split of 5 for 1.
b.     A share split of 2 for 4.
c.     One new ordinary share with a par value of P 15 is issued in exchange for one ordinary shares with a par value of P 25
d.     One new ordinary share with a stated value of P 12 is issued in exchange for one ordinary shares with a par value of P

Problem 4
Presented below is the Shareholders’ Equity of Wilco Corporation beginning of the year:

15% Preference Share Capital, P 150 par P 600,000

Ordinary Share Capital, P 30 stated value 200,000
Preference Share Premium 120,000
Ordinary Share Premium 150,000
Retained Earnings 950,000

Share capital transactions occurred during the current year:

Mar-03 600 preference shares were retired at P 165 per share.

May-21 Ordinary share split for five-for-one
Jun-14 2,000 ordinary shares were reacquired at P 8 per share.
Aug-05 One thousand preference shares were converted into ordinary share with conversion ratio of 4 OS for every 1 P
Nov-19 Reissued 1,200 treasury shares at 12 per share.
Dec-28 P 450,000 profit for the year.

Requirements:
1.     Prepare the journal entries for the transactions occurred.
2.     Prepare the Shareholders’ Equity at year-end.
3.     How many issued and outstanding shares at year-end?
a.     Ordinary Shares
b.     Preference Shares
7, there are 3,000 reissued treasury shares at P 25 per share. The remaining treasury shares were
shares with a par value of P 25.
ry shares with a par value of P 25.

sion ratio of 4 OS for every 1 PS.

1. Journal Entries

Date
1

6
2. Shareholders' Equity at year-end.
 Particulars Debit Credit
5% Preference share capital A/c   Dr (1000 * 50) 50,000.00
Preference share Premium A/c Dr (1000 * 28) 28,000.00
Preference Share holders (1000 * 78) 78,000.00

Preference Share Holders A/c DR 78,000.00

Cash 78,000.00
to record 1,000 preference shares that were retired at P 78 per share

5% Preference share capital A/c Dr (800 * 50) 40,000.00

Preference share Premium A/c Dr (800* 12) 9,600.00
Preference Share holders (800 * 62) 49,600.00

Preference Share Holders A/c DR 49,600.00

Cash 49,600.00
to record 800 preference shares that were retired at P 62 per share

5% Preference share capital A/c Dr (2000 * 50) 100,000.00

Preference share Premium A/c Dr (160,000-100,000) 60,000.00
Preference Share holders (2000*4 *20) 160,000.00

Preference Share Holders A/c DR 160,000.00

Equity Capital 160,000.00
to record 2,000 preference shares that were converted into ordinary shares with a
ratio of 1 PS into 4 shares

5% Preference share capital A/c Dr (1500 * 50) 75,000.00

Preference share Premium A/c Dr (180,000-75,000) 105,000.00
Preference Share holders (1500*6*20) 180,000.00

Preference Share Holders A/c DR 180,000.00

Equity Capital 180,000.00
to record 1,500 preference shares that were converted into ordinary shares with a
ratio of 1 PS into 6 shares

Equity Share Capital (2000*20) 40,000.00

Ordinary share premium (2000* 3) 6,000.00
Equity Share holders (2000*23) 46,000.00

Equity Share Holders A/c DR 46,000.00

Cash 46,000.00
to record reacquired 2,000 ordinary shares at P 23 per share

Cash (2000 * $21) 42,000.00

Equity Share Capital (2000 * $20) 40,000.00
Ordinary share premium (2000 * $2) 2,000.00
to record all reissued treasury shares at P 21 per share
 Shareholders Equity Amount "P"
5% Preference Share capital 735,000.00
Ordinary Share Capital 2,340,000.00
Preference Share Premium  97,400.00
Ordinary Share Premium 396,000.00
Retained Earnings 1,250,000.00
 Date
September 2

October 27

October 27
 Particulars Debit Credit
Treasury Stock 110,000.00
Cash 110,000.00
To record acquisition of 5000 shares at 22 per share

Cash
Treasury Stock 75,000.00
Additional Paid In Capital in excess of par 66,000.00
To record re-issue of 3000 treasury shares at 25 per share 9,000.00

Cash
Additional Paid In Capital in excess of par 36,000.00
Cash 8,000.00
To record re-issue of 2000 treasury shares at 18 per share 44,000.00
 Date
August 4

August 4

August 4
 Particulars Debit Credit
Equity share capital a/c 1,000,000.00
To Equity share capital a/c 1,000,000.00
to record 40,000 shares that has been split into 200,000 shares

Equity share capital a/c 1,000,000.00

To Equity share capital a/c 1,000,000.00

to record 40000 shares has been converted into 20000 shares being Reverse split

Share capital a/c (old) 1,000,000.00

To share capital a/c (new) 600,000.00
To Capital Reduction a/c 400,000.00
to record being change in share capital with change in par value
1. Journal Entries

Date
March 03

March 21

June 14

August 05

November 19

December 28
 Particulars Debit Credit
15% preference share capital (600*150) 90,000.00
Preference share premium (workings) 18,000.00
Cash (600*165) 99,000.00
Retained earnings 9,000.00
to record preference shares retired

No entry required
(Par value =30/5=P 6)
Number of ordinary shares=(200000/30)*5=33333

Treasury shares (2000*8) 16,000.00

Cash 16,000.00
to record ordinary shares reacquired

15% preference share capital (1000*150) 150,000.00

Ordinary share capital (1000*4*) 24,000.00
Ordinary share premium 126,000.00
to record preference shares converted

Cash (1200*12) 14,400.00

Treasury shares (1200*8) 9,600.00
Treasury share premium 4,800.00
to record reissued treasury shares

Income Summary 16,000.00

Retained earnings 16,000.00
to record profit for the year