You are on page 1of 2

Case A

ABC Corporation was organized on March 1, 2016 with authorized share


capital of 20,000 shares comprised of 7% preference shares with a P50 par
value and 30,000 ordinary shares with a P30 par value.
Mar 1 Incorporators subscribed 25% of the authorized preference share
capital and ordinary share capital at par and paid 25% of the total
subscriptions.

15 Collected from the incorporators 50% of the balance of their


subscriptions.

31 Collected the remaining balance of the incorporators


subscriptions.

April 1 Subscriptions were received for 3,000 shares of ordinary share


capital at P42 per share, P22 per share down payment with the
balance payable in two equal installments due on May 1 and
June 1.

2 Issued 16,500 ordinary shares to Mr. Amiel in exchange for his


business. Assets transferred to the corporation were valued as
follows: Buildings, P350,000; Equipment, P55,000; Merchandise,
P140,000.

29 Subscriptions were received for 12,000 shares of preference share


capital at P55 per share, P180,000 down payment with the balance
payable in two equal installments due on May 1 and June 1.

May 1 Amounts due on this date were collected from all ordinary and
preference share subscribers.

5 Issued 50 preference shares to an attorney as payment for a bill for


P3,200 covering legal fees in organizing the corporation.

26 Issued 500 preference shares for cash at P55.

June 1 Amounts due on this date were collected from ordinary and
preference share subscribers.

Required: 1. Prepare journal entries to record the foregoing transactions.


Case B
XYZ, Inc. began operations on January 1, 2016. Authorized were 30,000
shares of P50 par value ordinary share capital and 10,000 shares of P100
par value 8% preference share capital. The incorporators subscribed to
12,500 ordinary shares and paid 25% thereof. The following selected
transactions occurred during the first year of operations.

Jan 2 Issued 1,000 ordinary shares to an investor in exchange for


equipment valued at P34,000 and services rendered during
corporate formation valued at P18,000. The property had cost
the investor P38,000 three years before and was carried on the
investors books at P35,000.

Feb 2 Issued 1,000 preference shares at P150 per share.

Mar 10 Sold 3,000 ordinary shares for P59 per share.

Apr 10 4,000 ordinary shares were subscribed by various subscribers at


P55 per share.

May 1 Received subscriptions for 2,000 preference shares at P102 with


20% down payment, balance to be paid in three equal
installments.

June14 Exchanged 7,000 ordinary shares and 1,500 preference shares


for a building with a fair market value of P500,000. The
building was originally purchased for P580,000 and has a
carrying value of P520,000.

July 27 The first installment on May 1 subscription was collected.

Aug 31 Received full payment on April 10 subscriptions.

Sept 28 Received 10 acres of land in exchange for 800 preference shares


from a wealthy shareholder to be used for construction of a new
factory. Estimated fair market value of the land was P85,000.
The cost of the land to the shareholder was P80,000.

Oct 29 Subscriptions were received for 2,500 preference shares at


par value with a 30% down payment.

Required: 1. Journalize the above share capital transactions.