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Closealltheledgeraccountswithbalancesexceptthepartners'cptlco na ddbtRci a lfo NmoC r oai n a iaac u tn e i" eevber m a e f op rto D a t e P A R T I C U L A R S P / R R e c e i v a b l e f r o n N a m e o f C o r p o r a t i o n X X X X L i a b i l i t i e s X X X X A l l o w a n c e f o r b a d d e b t s X X X X A c c u m u l a t e d d e p r e c i a t i o n P P E X X X X A s s e t s X X X X Torecordthetrasnferofassetsandliabilitiest t enwyf r e c r oai n oh e l omdop rto . cRc r t eei tosokfo t enwyf r e c r oai n . eodhrcp ft c sr mh e l omdop rto D a t e P A R T I C U L A R S P / R S t o c k s o f N a m e o f C o r p o r a t i o n X X X X R e c e i v a b l e f r o m N a m e o f C o r p o r a t i o n X X X X TorecordreceiptofstockcertificatesD a t e P A R T I C U L A R S P / R R o s e , C a p i t a l X X X G u a d a , C a p i t a l X X X X S t o c k s o f N a m e o f C o r p o r a t i o n X X X X Torecordreceiptofstockcertificates Note: The debits to the partners capital accounts represent their final capital balances d.Recordthedistributionofstockstothepartners. D E B I T C R E D I T D E B I T C R E D I T D E B I T C R E D I T Pro-forma Entries: Books of the New Corporation Authorization Authorized to issue _____ shareswith a par value of P ___. Subscription

S u b s c r i p t i o n s r e c e i v a b l e x x x S u b s c r i b e d s h a r e c a p i t a l x x x Collection/Transfer of partnership assets and liabilities A s s e t s x x x L i a b i l i t i e s x x x A l l o w a n c e f o r b a d d e b t s x x x S u b s c r i p t i o n s r e c e i v a b l e x x x Issuance of stock S u b s c r i b e d s h a r e c a p i t a l x x x certificates S h a r e c a p i t a l x x x Marivic Valenzuela-Manalo14

Accounting for Delinquent Subscription There are instances when a subscriber cannot pay in full the amount he subscribedto. Payment of the balance on subscription may either be specified in the contract of subscription or in lieu thereof may be subject to call by the Board of Directors.According to the Corporation Code of the Philippines, if w i t h i n t h i r t y ( 3 0 ) d a y s f r o m t h e s a i d d a t e , n o p a y m e n t i s made; all stocks covered by said subscription shall thereupon become delinquent and shall be subject to sale.When a subscriber fails to pay his subscription on the call date, the corporation sendsseveral notices to remind him of his obligation. If no payment was made by thesubscriber, his subscription is declared as delinquent subscriptions and the subscriber iscalled a defaulting subscriber. And these delinquent stocks are offered for sale in a public auction.1.The sale of the delinquent stocks is advertised to have possible buyers/bidders. All expenses incurred relating to the sale of the delinquent shares will be chargedor debited to Receivable from Highest Bidder account since this amount willeventually be collected to the highest bidder together with the unpaid balance of the subscription.2.An auction sale is co nducted where a highest bidder is chosen.3.The sale of the delinquent subscription is issued to the highest bidder.4 . T h e highest bidder is the one who is willing to pay the unpaid balance of thesubscription plus accrued interest plus all expenses related to the sale and who iswilling to receive the least/smallest number of shares.5.Once the subscription is fully paid, all subscribed shares are issued. Shares are first given to the highest bidder. The excess shares are given to the defaultingsubscriber.6.If there is no bidder, all of the delinquent shares will be issued in the name of the corporation. Such shares are considered treasury shares. The defaultingsubscriber does not get any share of stock.Marivic Valenzuela-Manalo15 Pro-forma Entries using the Short Method of accounting for delinquent stocks aRc r t es bci to . eodh u srpi n D a t e P A R I C U L A S P / R S u b s c p t i o n r e c e i v a b l X X X S u s c i b e d s h a r e c a p i t a X X X X C a s h X X X X S u b s c r p t i o n r e c e i v b l e X X X e ty nr R e c e i v a b l e f r h i g h e s t b i d d e r X X X X C a s h X X X

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X C a s h X X X X S u b s c r i b e d s h a r e c a p i t a l X X X X R e c e i v a b l e f r o h i g h e s t b i d d e r X X X X S u b s c r i p t i o n s r e c e i v a b l e X X X X S h a r e c a p i t a l X X X X OR T r e a s u r y s t o c k X X X X S u b s c r i b e d s h a r e c a p i t a l X X X X R e c e i v a b l e f r o h i g h e s t b i d d e r X X X X S u b s c r i p t i o n s r e c e i v a b l e X X X X S h a r e c a p i t a l X X X X eT ehg et i dr a sa dc rep n i gsoketfctsris e f.Ifthereisnobidderatall . h i hsbd epy n ors o dn t c criiaeaesud D E B I T C R E D I T bRc r priloeto c.CorporationsendsseveralnoticesbutnopaymentwasmadebythesubscriberdT eop rto i c re c sseae t t esli g fhdln uns ae . eod atac l ci n . hc r oai nnurd otrltdoh en ot e ei q e thrs Illustrative problem: Assume that Joseph subscribed 250 shares of Ordinary share at P25.00 (P20.00 isthe par value). After paying 50% on his subscriptions, he defaulted. Due process wastaken and the shares were declared delinquent. Advertising and other cost includingthose advances made by the corporation amounted to P500.00At the public auction, bids from Mary, Clare and Luisa were received. Mary bid230 shares; Clare for 240; and Luisa for 245 shares. The highest bidder paid the amount due and stock certificate was issued by the corporation.REQUIRED: Record the above transactions.Marivic Valenzuela-Manalo16