BASIC ACCOUNTING

TASK PERFORMANCE

Direction: Prepare journal entries for the below transactions using Memo entry method and prepare the
shareholder’s Equity using IAS recommendation.

Jan 1. ABC corporation was formed and authorized to issue 50,000 convertible cumulative non-
participating 10% preference shares with a par value of 150 per share and 100,000 ordinary shares with
stated value of 100 per share.
Jan 2. The incorporators subscribed 12,500 preference shares and 25,000 ordinary shares.
Jan 3. The incorporators paid 25% of their subscriptions.
Jan 4. Issued 100 preference shares to a lawyer who drafted the articles of incorporation whose
bill for the services rendered was 25,000.
Jan 5. Cash subscription received, 10,000 preference shares at 155 per share and 20,000
ordinary shares at 105 per share.
Jan 6. Received subscriptions for 10,000 ordinary shares at 105 per share, receiving a 25% down
payment. The balance will be paid in June of the same year.
Jan 7. Received subscriptions for 5,000 preference shares at 155 per share, receiving a 40%
down payment. The balance will be paid in Feb next year.
Jan 8. Sold 100 preference shares for cash at 155 per share and 200 ordinary shares at 105.
Jan 9. Issued 2,000 ordinary shares to Mr. A in exchange for furniture with market value of 250,000.
Jan 10. The incorporators paid the remaining balance of their subscription on Jan 2 and the corresponding
stocks certificates were issued.
Jan 19. ABC corporation acquired 100 shares of its own ordinary shares at 150 per share.
Jan 20. ABC corporation acquired 100 shares of its own ordinary shares at 90 per share.
Jan 21. Mr. A owed ABC corporation amounting to 10,000. He surrendered his certificate for 90 of his
ordinary shares.
Jan 22. ABC corporation reissued the 100 shares acquired on Jan 20 @ 155 per share.
Jan 23. ABC corporation reissued the 90 shares acquired on Jan 21 @ 85 per share.
Jan 24. ABC corporation retired and cancelled the 5 shares acquired on Jan 21.
Jan 25. The corporation earned 5,000,000 net income and it is closed to Retained earnings account.
Jan 26. The board of directors declared cash dividend amounting to 1,000,000.
Jan 27. Merchandise costing 50,000 was declared as dividends.
Jan 28. 10% ordinary stock dividend is declared and the market price of ordinary share capital 120 per
share.
Jan 29. ABC corporation decided to change the capital structure of ordinary shares from stated value of
100 to 120 par value.
Jan 30. ABC corporation decided to reduce the par value of preference shares from 150 to 145.
Jan 31. ABC corporation appropriated 1,000,000 for plant expansion and 500,000 for future contingency.