--INITIAL STOCK OFFERING AND SUBSCRIPTIONS--

MEMORANDUM ENTRY METHOD JOURNAL ENTRY METHOD

1. AUTHORIZATION OF SHARES
-NO ENTRY- UNISSUED CAPITAL STOCK 4,000,000
Only a memo is recorded AUTHORIZED CAPITAL STOCK 4,000,000
Ex. “The company was authorized to issue capital
stock of P4,000,000, 40,000 shares at P100 par
value.”

2. RECEIVED SUBSCRIPTIONS (10,000 shares @ par)

SUBSCRIPTION RECEIVABLE 1,000,000 SUBSCRIPTION RECEIVABLE 1,000,000
SUBSCRIBED CAPITAL STOCK 1,000,000 SUBSCRIBED CAPITAL STOCK 1,000,000

3. COLLECTED 25% OF THE SUBSCRIPTIONS

CASH 250,000 CASH 250,000
SUBSCRIPTION RECEIVABLE 250,000 SUBSCRIPTION RECEIVABLE 250,000

4. RECEIVED FULL PAYMENT FOR THE ABOVE

SUBSCRIPTIONS
CASH 750,000 CASH 750,000
SUBSCRIPTION RECEIVABLE 750,000 SUBSCRIPTION RECEIVABLE 750,000
5. ISSUANCE OF STOCK CERTIFICATES
SUBSCRIBED CAPITAL STOCK 1,000,000 SUBSCRIBED CAPITAL STOCK 1,000,000
CAPITAL STOCK 1,000,000 UNISSUED CAPITAL STOCK 1,000,000

6. RECEIVED CASH SUBSCRIPTION (5,000 @ P120)

CASH 600,000 CASH 600,000
CAPITAL STOCK (5,000@100) 500,000 UNISSUED CAPITAL STOCK 500,000
SHARE PREMIUM (5,000@20) 100,000 SHARE PREMIUM 100,000

--OTHER SHAREHOLDERS’ EQUITY TRANSACTIONS—

 ISSUANCE OF SHARES FOR NONCASH CONSIDERATION (8,000 SHARES @ P100 par)
FV OF LAND 1,000,000

LAND 1,000,000 NOTE ON SUBSCRIPTION RECEIVABLE:

COMMON SHARES (8,000@100) 800,000 IF SUBSCRIPTION RECEIVABLE HAS A
SHARE PREMIUM 200,000 BALANCE AT YEAR-END,

1. IF SHORT-TERM – PRESENT AS OTHER

 CONVERTIBLE PREFERRED STOCK
RECEIVABLES IN CURRENT ASSETS SECTION.
Preferred stock, 10,000 shares, P100 par 1,000,000
Common stock, 100,000 shares issued, P30 par 3,000,000 2. IF LONG-TERM (>12 MONTHS) – PRESENT
Share premium-preferred 200,000 AS DEDUCTION FROM SHAREHOLDERS’
Share premium-common 1,000,000 EQUITY.
Retained Earnings 2,000,000

Case 1-Converted P/S to 3 C/S

Preferred Stock 1,000,000
Share premium-P/S 200,000
Common Stock 900,000
Share premium-C/S 300,000
 Case 2-Converted P/S to 5 C/S
Preferred Stock 1,000,000
Share premium-P/S 200,000
Retained Earnings 300,000
Common stock 1,500,000

 TREASURY SHARES
o ACQUISITION OF TREASURY SHARES
Acquired 5,000 @ P120 par, of own shares for P150 per share.

TREASURY SHARES 600,000

CASH 600,000

Note: if the treasury shares is acquired using non cash consideration, use BOOK VALUE

o REISSUANCE OF TREASURY SHARES AT COST

Reissued 1,500 of its treasury shares for P150 per share

CASH 225,000
TREASURY SHARES 225,000

o REISSUANCE OF TREASURY SHARES AT ABOVE COST

Reissued 1,500 of its treasury shares for P175 per share

CASH 262,500
TREASURY SHARES (1,500 X 120) 180,000
SHARE PREMIUM-TREASURY 82,500

o REISSUANCE OF TREASURY SHARES AT BELOW COST

Reissued 1,500 of its treasury shares for P105 per share

CASH 157,500 NOTE: ORDER OF PRIORITY FOR

SHARE PREMIUM-TREASURY 22,500 REISSUANCE OF TREASURY SHARES
TREASURY SHARES 180,000 @ LOSS:

ASSUME: REISSUED @ P60 PER SHARE 1. SHARE PREMIUM – TREASURY

SHARES
2. RETAINED EARNINGS
CASH 90,000
SHARE PREMIUM-TREASURY 82,500
RETAINED EARNINGS 7,500
TREASURY SHARES 180,000
 RETIREMENT OF TREASURY SHARES
o CASE 1 – RETIREMENT RESULTS IN A GAIN
3,000 TREASURY SHARES @ P100 PER SHARE, PAR P120 NOTE: ORDER OF PRIORITY FOR
RETIREMENT OF TREASURY SHARES
ORDINARY SHARES (3,000@120) 360,000 @ A LOSS:
TREASURY SHARES (3,000@100) 300,000
SHARE PREMIUM-TREASURY 60,000 1. SHARE PREMIUM – ORIGINAL
ISSUANCE**
2. SHARE PREMIUM – TREASURY
o CASE 2 – RETIREMENT RESULTS IN A LOSS
3. RETAINED EARNINGS
3,000 TREASURY SHARES @ P100 PER SHARE, PAR P70
OTHER GIVEN DATA:
SHARE PREMIUM-ORIGINAL ISSUANCE **directly attributable to the retired
(ATTRIBUTABLE TO TREASURY SHARES) P 5,000 shares. If unavailable, prorate (number
SHARE PREMIUM-TREASURY SHARES P 50,000 of treasury shares divided by total
RETAINED EARNINGS P 500,000 shares of the orig. same class with T/S
multiply by the monetary amount of
ORDINARY SHARES (3,000@70) 210,000 share premium – original issuance)
SHARE PREMIUM-ORIG ISSUANCE 5,000
SHARE PREMIUM-TREASURY 50,000
RETAINED EARNINGS 35,000
TREASURY SHARE (3,000@100) 300,000

 DIVIDENDS
o CASH DIVIDENDS
Declared P5/share cash dividends to stockholders, outstanding shares 100,000.

Date of Declaration
RETAINED EARNINGS 500,000
CASH DIVIDENDS PAYABLE 500,000

Date of Record
--NO ENTRY—

Date of Payment
CASH DIVIDENDS PAYABLE 500,000
CASH 500,000

o PROPERTY DIVIDENDS
Declared property dividends in the form of Land.
FV of Land – P20,000,000
NOTE: PROPERTY DIVIDENDS ARE
BV of Land – P18,000,000
RECORDED AT BOOK VALUE.

Date of Declaration
RETAINED EARNINGS 18,000,000
PROPERTY DIVIDENDS PAYABLE 18,000,000

Date of Record
 --NO ENTRY—
Date of Payment
PROPERTY DIVIDENDS PAYABLE 18,000,000
LAND 18,000,000

o STOCK DIVIDENDS
CASE 1 -Declared 10% stock dividends to stockholders.
100,000 shares @ P50 par. MV of shares, P60. STOCK DIVIDENDS:
LESS THAN 20% STOCK DIVIDENDS –
SMALL STOCK DIVIDENDS
Date of Declaration
-- FAIR VALUE OF SHARES IS USED
RETAINED EARNINGS ((100,000*10%) X 60) 600,000
STOCK DIVIDENDS PAYABLE 600,000 20% AND ABOVE –
LARGE STOCK DIVIDENDS
Date of Record -- PAR VALUE OF SHARES IS USED
--NO ENTRY—

Date of Payment
STOCK DIVIDENDS PAYABLE 600,000
COMMON STOCK (10,000*50) 500,000
SHARE PREMIUM-COMMON 100,000

CASE 2 -Declared 25% stock dividends to stockholders.

100,000 shares @ P50 par. MV of shares, P60.

Date of Declaration STOCK DIVIDENDS:

RETAINED EARNINGS ((100,000*25%) X 50 1,250,000 IF THERE ARE STOCK DIVIDENDS
STOCK DIVIDENDS PAYABLE 1,250,000 PAYABLE AT YEAR-END, STOCK
DIVIDENDS PAYABLE IS PRESENTED AS
AN ADDITION TO THE TOTAL
Date of Record
SHAREHOLDERS’ EQUITY.
--NO ENTRY—

Date of Payment
STOCK DIVIDENDS PAYABLE 1,250,000
COMMON STOCK 1,250,000