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ACCOUNTING 3

MIDTERM EXAM

PROBLEM 1

Miami Heat Corporation is authorized to issue 50,000 shares of Ordinary Shares with par value
of P10 per share and 25,000 shares of 6% Preference Shares with par value of P5. Fifty per cent
of the total authorized capital was subscribed and twenty five per cent of the subscription was paid
up.

July 1 Issued 300 shares of preference shares to Atty. Erik Spoelstra in payment of his
professional services worth P2,000.
6 A piece of land costing P25,000 was acquired in exchange of 2,000 ordinary
shares.
8 Received subscription from Rashard Lewis for:
500 shares of Preference at P6.00
400 shares of Ordinary at P8.00
9 Issued 200 ordinary shares at P11 per share and 300 shares of preference at P5
for cash to Ray Allen.
11 Collected cash from Rashard Lewis representing 50% payment of his
subscription.
14 Received subscription for 150 ordinary shares at P12 and 100 preference shares
at P7 from Mario Chalmers with 20% down payment applicable to both classes.
21 Collected in full the subscription balance from preference shares of Mario
Chalmers.
23 Received subscription of 200 preference shares at par value from Joel Anthony.
25 Received subscription of 500 ordinary shares at par value from Juan Howard.
28 Issued 100 ordinary shares for cash at P13.
30 Issued 300 preference shares for cash at P4.

Required: Record the above transactions under Memorandum Entry Method and Journal Entry
Method and Prepare Shareholders’ Equity for each method.

PROBLEM 2
Mr. Bob Agustin Gelacio is a subscriber of Kidapawan Fruit Processing Corporation for 300
shares of stocks at P150 par value per share. He failed to pay his subscription balance of
P27,000 which is equivalent to 180 shares despite lawful calls and notices being sent to him.
The corporation declared all the shares to be delinquent and advertises for the auction sale.
Three bidders were received and all signified their intentions to pay the balance of P27,000 plus
advertising expenses of P560 but differ on the share that each bidder will acquire.

Sylvia Gondales - bids for 170 shares


Fely Ardina - bids for 174 shares
Helen Grace Ferrer - bids for 178 shares

Question 1: How many shares are declared as delinquent?


Question 2: Who is the highest bidder in the auction sale?
Question 3: How much cash that the subscriber Mr. Gelacio has paid to the corporation?
Question 4: What is the journal entry to record the delinquency sale of Mr. Gelacio?
Question 5: After the auction sale and upon issuance of certificate of stocks, how many shares
must be issued to Mr. Gelacio and the highest bidder?
Question 6: If there are no bidders at all, the corporation may in itself bid for the delinquent
shares. What is the journal entry in the book of Kidapawan Fruit Processing Corporation?

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