Yvonne Antonette P.

Duyao ACT 1122 – SEC 9

Problem 1 - Contributed Capital
Journal Entries

Cash 32,500
Ordinary Shares
Jan 16 Share Premium – Ordinary Shares 22,100

10,400
Solution: 1,300 shares x 25 pesos = 32,500
1,300 shares x 17 par value = OS
32,500 – 22,100 = Share Premium- OS

Building 324,000
Mar 21 Ordinary Shares
Share Premium – Ordinary Shares 204,000

120,000
Solution: 12,000 shares x 27 pesos = 324,000
12,000 shares x 17 par value = OS
324,500 – 204,000 = Share Premium-OS

Treasury Shares 13,000

May 7 Cash
13,100
Solution: 500 shares x 26 pesos = 13,000

Cash 2,800
Subscription Receivable 25,200
Subscribed OS
Share Premium – Ordinary Shares 17,100
July 1
11,000
Solution: 1,000 shares x 28 pesos = 28,000
28,000 x 0.10 =2,800 cash amount
28,000 – 2,800 = 25,200
1000 shares x 17 par value = SR
25,200 – 17,000 + 2800 = Share Premium – Ordinary Share

Cash 14,500
Treasury Shares
Sep 20 Share Premium – Treasury Shares 13,000

1,500
Solution: 500 shares x 29 pesos = 14,500
500 shares x 26 pesos = TS
14,500 – 13,000 = Share Premium- Treasury Share
 Cash 25,200
Subscription Receivable
Dec 1 13,000
Solution: subscription receivable value
Subscribed Ordinary Shares 17,000
Ordinary Shares
17,000
Solution: 1000 shares x 17 pesos = 17,000

1. Total Contributed Capital for Dec 31, 2012

Share Premium -TS

Ordinary Shares 1,500
Share Premium -
306,000
OS
22,100
126,000
204,000
10,400
17,000
120,000
=
11,000
549,100
=
267,400
Contributed Capital
Ordinary Shares
549,100
Share Premium – OS
267,400
Share Premium - TS
1,500
Total:
818,000

2. What is the total Paid-in capital at the end of 2011?

B. 370,000
Solution: 30,000 x 7 = 210,000
20,000 x 8 = 160,000
210,000 + 160,000 = 370,000

Problem 3 – Share Premium

What should be the total share premium as of Dec 31, 2021?

Date Value
January 4
---------
April 8
200,000
June 9
150,000
July 29
 ---------
December 31
200,000
Answer:
550,000

Solution: January 4 - 5 pesos per share – 5 pesos per share = 0

April 8 - 100,000 x 2 (7 pesos per share – 5 pesos per share)

June 9 – 30,000 x 5 (10 pesos per share – 5 pesos per share)

July 29 – 4 pesos per share – 5 pesos per share = invalid

December 31 – 50,000 x 4 (8 pesos per share – 4 pesos per share)

Problem 4: Comprehensive
1. Prepare Journal Entries

The corporation was given the authorization to issue 10,000 preferred

Jan 7 shares with a par value of P50 each and 200,000 shares of common stock
with a par value of P10 each.

Cash 560,000
Common Stock
Jan 28 Share Premium – Common Stock 400,000

160,000
Solution: 40,000 shares x 14 pesos = 560,000
40,000 shares x 10 par value = CS
560,000 – 400,000 = Share Premium- CS

Land 240,000
Building 960,000
Common Stock
Share Premium – Common Stock 800,000
Feb 3
400,000
Solution: 80,000 shares x 15 pesos = 1,200,000
250,000 land + 1,000,000 building = 1,250,000
250/1250 x 1,200,000 = 240,000
1,000/1250 x 1,200,000 = 960,000
80,000 shares x 10 par value = 800,000
1,200,000 – 800,000 = share premium – common stock
 Organization Cost 32,000
Common Stock
Feb 24 Share Premium – Common Stock 20,000

12,000
Solution: 2,000 shares x 16 pesos = 32,000
2,000 shares x 10 par value = 20,000
32,000 – 20,000 = Share Premium- CS

Cash 212,000
Subscription Receivable 318,000
Subscribed Preferred Stock
Share Premium – Preferred Stock 500,000
Sep 12
30,000
Solution: 10,000 shares x 53 pesos = 530,000
530,000 x 0.40 down payment = 212,000
530,000 – 212,000 = Subscription receivable
10,000 – 50 = Subscribed preferred stock
530,000 – 500,000 = Share premium - PS

Treasury Share 80,000

Oct 1 Cash
80,000
Solution: 5,000 shares x 16 = 80,000

Cash 54,000
Treasury Share
Nov 5 Share premium – Treasury Share 48,000

6,000
Solution: 3,000 shares x 18 pesos = 54,000
3,000 shares x 16 pesos = TS
54,000 – 48,000 = Share Premium- CS

Cash 60,000
Dec 10 Share premium – Donated capital
60,000
Solution: 40,000 shares x 14 pesos = 560,000
40,000 shares x 10 par value = CS
560,000 – 400,000 = Share Premium- CS

Profit and Loss Summary 300,000

2. How much is the contributed capital? P2,388,000
3. How much is the share premium as of December 31? P668,000
4. How much is the total shareholder’s equity as of December 31? P2,656,000
5. How much is the legal capital? P1,720,000
Problem 5 – Comprehensive
1. Total liabilities and shareholders' equity – 11,326,600
2. Shareholders' equity - 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 shares
7. Share premium – 529,600

Problem – Treasury Shares (Charity Corp.)

Problem 7 – Wilco Corp.

Problem – Components of SHE (Mara Company)

What total amount should be reported as shareholders’ equity?
Answer: 5,100,000
Solution:
Authorized Share Capital 5,000,000
Unissued Share Capital (2,000,000)
Issued Share Capital
3,000,000
Subscribed Share Capital 1,000,000
Subscription Receivable (400,000) 600,000
500,000
Share Premium
Retained earnings:
Unappropriated 600,000
 Appropriated 300,000 900,000
Revaluation Surplus 200,000
Total 5,200,000
Treasury Shares (100,000)
Shareholders’ Equity 5,100,000

Problem 6 – Penn Company page 9-10

What is the total shareholders’ equity on December 31, 2019?
Answer: 7,920,000
Penn Company
Shareholders’ Equity for December 31, 2019
Ordinary Share Issuance 7,125,000
Net Income 2019 1,025,000
Dividend 2019 (230,000)
Total Shareholders’ Equity (2019) 7,920,000

Solution:
Ordinary Share Issuance = 950,000 shares x ½ x 15
Net Income = given
Dividend = declared

What is the total shareholders’ equity on December 31, 2020?

Answer: 11,850,000
Penn Company
 Shareholders’ Equity for December 31, 2020
Shareholders’ equity – Dec 31, 2019 7,920,000
Ordinary Shares Issuance 1,700,000
Preference Shares Issuance 1,200,000
Preference Shares Issuance 450,000
Net Income 2020 1,215,000
Dividend 2020 (635,000)

Total Shareholders’ Equity (2020) 11,850,000

Solution:
Ordinary Shares Issuance = 100,000 shares x 17
Preference Shares Issuance = 150,000 shares x 8
Preference Shares Issuance = 50,000 shares x 9
Net Income = given
Dividend = declared
Problem 7 – Newton Company page 27
What is the total shareholders’ equity on December 31, 2020?
Answer: 3,290,000

Newton Company
Shareholders’ Equity for December 31, 2020
Ordinary Shares Issuance 3,000,000
Net Income 750,000
Paid Cash Dividend (380,000)
Purchase of Treasury Shares (144,000)
Sale of Treasury Shares 64,000

Retired Treasury Shares ------

Total Shareholders’ Equity (2020) 3,290,000