Problem 2

SHAREHOLDERS EQUITY

PARTICULARS DEBIT CREDIT

Cash 1,000,000
Ordinary Share Capital 1,000,000
to record issuance of Share

Treasury Shares 300,000

Cash 300,000
To record Acquisition of Treasury Shares
Memo:
Effected a 2 for 1 share split reducing the par value to 25 and increasing
the number of shared to 60,000

Cash 120,000
Treasury Shares 90,000
Share Premium - Treasury shares 30,000
To record reissue of treasury Shares

Memo:
Fifteen Thousand (15,000) Share of 100 par value ordinary shares were
received as donations from various Shareholders.

Cash 400,000
Donated Capital 400,000
To record reissued donated Shares

Dec-31 Income summary 500,000

Retained Earning 500,000
To record Net income for the year.

Retained Earning 210,000

Appropriated Retained Earning 210,000
To record appropriation of retained earning

XShare holders Equity Ordinary Prefferd

Shares outstanding balance 2,500,000 500,000
Share issued 1,000,000  
Total Shares outstanding 3,500,000 500,000
Share Premium 500,000 200,000
     
Total 4,000,000 700,000
   
Ordinary Shares 700,000
Preferred Shares 4,000,000
Treasury Share Premium 30,000
Donated Capital 400,000
Retained Earning  
Appropriated 210,000
Unappropriated 2,290,000
Treasury shares   -210,000
Shareholder's Equity   7,420,000
Problem 2
Shareholder’s Equity
X
Date Particular Debit Credit
2020
May-31 Cash 6,000,00
0
Bonds Payable 5,000,000
Share Warrants Outstanding 750,000
Premium on bonds Payable 250,000
To record issuance of bonds and share warrants

Issue Price of Bonds with warrants 6,000,00

Shareholder's Equity   0
Market
Shares Issued Value
(72,000 of Bonds ex- Warrant
× 100) - 7,200,000
5,250,00
Share Premium 0 2,310,000
Residual Amount allocated to warrants 750,000
Retained earnings 8,000,000
Total 17,510,000
 
Dec-31 Cash   1,400,00
0
Share Warrants Outstanding 500,000
Ordinary Share Capital 1,200,000
Ordinary share premium 700,000
Issuance of Shares with regards to share warrants

Dec-31 Income summary 2,000,00

0
Retained Earning 2,000,000
To record net income for the year.
2021
Jul-15 Memo:
issued rights to shareholders, 1 right on each share,
permitting holders to acquire for a one-year period 1
share at P130 with every 5 rights submitted

Dec-31 Cash 1,560,00

0
Ordinary Capital 1,200,000
Ordinary Share Premium 360,000
to record issuance of shares as a result of issuance of rights

Dec-31 Share Warrants Outstanding 250,000

Share premium not exercised 250,000
To Record expired share warrants

Net Income 3,000,00

0
Retained Earning 3,000,000
to record net income for the year