a To close income summary to drawing accounts.

P/L Ratio
Arnel, Drawing 37,500 1 300,000x1/3
Floyd, Drawing 112,500 3 300,000x3/8
Danny, Drawing 150,000 4 300,000x4/8
Income summary 300,000 8

Financial Position after closing Income summary

Cash 240,000
Non-cash assets 1,100,000
Arnel, Drawing 37,500
Floyd, Drawing 232,500 120,000+112,5000
Danny, Drawing 240,000 90,000+150,000
Total 1,850,000

Liabilities 650,000
Arnel, Capital 300,000
Floyd, Capital 540,000
Danny, Capital 360,000
Total 1,850,000

b To update partner's equity by closing drawing accounts to capital accounts

Arnel, Capital 37,500
Floyd, Capital 232,500
Danny, Capital 240,000
Arnel, Drawing 37,500
Floyd, Drawing 232,500
Danny, Drawing 240,000

Financial position to update partner's equity

Cash 240,000
Non-cash assets 1,100,000
Total 1,340,000

Liabilities 650,000
Arnel, Capital 262,500 300,000-37,500
Floyd, Capital 307,500 540,000-232,500
Danny, Capital 120,000 360,000-240,000
Total 1,340,000

c Statement of liquidation
Cash Non-cash aLiabilities Arnel, CapiFloyd, Capital
Balance before liquidation 240,000 1,100,000 650,000 262,500 307,500
Sale of assets and distribution of loss 370,000 -1100000 -91,250 -273750
Balances 610,000 650,000 171,250 33,750
 Aditional Cash 245,000
Balances 855,000 650,000 171,250 33,750
Payment of liabilities -650,000 -650000
Balances 205,000 171,250 33,750
Payment of partners -205,000 -171,250 -33,750

1,100,000
-370,000
Loss to be distributed to partners 730,000

Arnel 730000x1/ 91,250

Floyd 730000x3/ 273750
Danny 730000x4/ 365,000
730,000

Solvency of partners Personal aPersonal liaAssets - LiaSolvent/Insolvent

Arnel 2,000,000 1,950,000 50,000 Solvent
Floyd 7,500,000 7,750,000 -250,000 Insolvent
Danny 4,000,000 3,500,000 500,000 Solvent

d Liquidation of Entries
1 Sell non cash assets for cash and allovation of loss on sale
Cash 370,000
Arnel, Capital 91,250
Floyd, Capital 273750
Danny, Capital 365,000
Non-cash assets 1,100,000

2 Additional asset of deficit partners and he is solvent up to 500,000

Cash 245,000
Danny, Capital 245,000

3 Payment of Liabilities
Liabilities 650,000
Cash 650,000

4 Payment to partners
Arnel, Capital 171250
Floyd, Capital 33750
Cash 205,000
300,000x1/3
300,000x3/8
300,000x4/8

Floyd, Capital
5 Prepare the journal entries to record each of the following transactions under the memorandum en
Date Particulars Debit
1-Feb Subscription receivable (300,000 x 10) 3000000
Subscribed Share Capital
To record subscription

Cash (300,000 + 750,000) 1050000

Subscription Receivable
To record down payment of incorporators

14-Feb Cash (160,000 x 12) 1920000

Share Capital (160,000 x 10)
Paid in excess of Par
Received cash for 160,000 shares issued

14-Mar Land (1,750,000 x 2) 3500000

Share Capital (320,000 x 10)
Paid in excess of Par
Received land in exchange for 320,000 shares.

28-Apr Organization Expenses 50000

Share Capital
Paid in excess of Par
Issued certificate for legal services of Isko Pangilinan

30-Apr Cash (1,500,000 x .80) 1200000

Subscription Receivable
Received balance of subscription from A and B

Subscribed Share Capital (150,000 x 10) 1500000

Share Capital
Issued stock certificate for A and B

SHAREHOLDER’S EQUITY
Contributed Capital:
Paid in Capital
Share Capital (634,500 shares) 6,345,000
Subscribed Share Capital (150,000 shares) 1,500,000
Total
Additional Paid in Capital:
Share Premium
 Retained Earnings
Total Shareholder’s Equity

6 Refer to No. 5, answer the same requirements but use the journal entry method.
Date Particulars Debit
1-Feb Unissued Share Capital (1,000,000 x 10) 10,000,000
Authorized Share Capital
To record authorization of shares

Subscription receivable 3,000,000

Subscribed Share Capital
To record subscription

Cash 1,050,000
Subscription Receivable
To record down payment of incorporators

14-Feb Cash 1,920,000

Unissued Share Capital
Paid in excess of Par
Received cash for 160,000 shares issued

14-Mar Land 3,500,000

Unissued Share Capital
Paid in excess of Par
Received land in exchange for 320,000 shares

28-Apr Organization Expenses 50,000

Unissued Share Capital
Paid in excess of Par
Issued 4,500 shares

30-Apr Cash 1,200,000

Subscription Receivable
To record collection of payment from A and B

Subscribed Share Capital 1,500,000

Unissued Share Capital
Issued certificates to A and B

SHAREHOLDER’S EQUITY
Authorized Share Capital 10,000,000
Less: Unissued Share Capital 3,655,000
Share Capital
Subscribed Share Capital
Paid in excess of Par
Less: Retained Earnings
Total Shareholder’s Equity
er the memorandum entry method and present the shareholders’ equity section:
Credit

3000000

1050000

1600000
320000

3200000
300000

45000
5000

1200000

1500000

7,845,000

625,000
 -50,000
8,420,000

Credit

10,000,000

3,000,000

1,050,000

1,600,000
320,000

3,200,000
300,000

45,000
5,000

1,200,000

1,500,000

6,345,000
1,500,000
 625,000
-50,000
8,420,000
13 Matt Corporation, on April 1, was authorized to issue 150,000 shares of no par value common stoc
a Prepare journal entries in comparative format to record the transactions through December 31 us
Date Particulars Debit Credit
1-Apr Authorized to issue 150,000 shares at P50 stated value
Cash (40,000x50) 2,000,000
Share Capital 2,000,000
Received cash for 40,000 shares sold

30-Apr Organization expense 19,500

Share Capital (300x50) 15,000
In excess of stated value (19,500 - 15,000) 4,500
Issued 300 shares to corporate lawyer for legal services

1-May Organization expense 50,000

Cash 50,000
To record payment for pre-incorporation cost

13-May Building 1,500,000

Land 1,000,000
Share Capital (40,000x50) 2,000,000
In excess of stated value (2,500,000 - 2,000,000) 500,000
Issued 40,000 shares to Atlas Company in exchange for building and land

18-Jul Cash (10,000x64) 640,000

Share Capital (10,000x50) 500,000
In excess of stated value (640,000 - 500,000) 140,000
Issued 10,000 shares to Neptune Company at 64 share

20-Dec Subscription Receivable (4,500x72) 324,000

Subscribed shares capital (4,500x50) 225,000
In excess of stated value (324,000 - 225,000) 99,000
To record subscription from wealthy investor

Cash (324,000/2) 162,000

Subscription Receivable 162,000
To record down payment of subscription

31-Dec Revenue 1,000,000

Operation expense 750,000
Income Summary 250,000
To record profit of the year

Income summary
Taxes Payable (250,000x.30) 75,000
To record Taxes payable 75,000
b Prepare the shareholders' equity section of Matt Corporation as at December 31 using a compara
Matt Corporation
Shareholder's Equity
As of December 31,2021
Paid in Capital
Authorized 150,000 shares,
P50 stated value
Share Capital, 90,300 shares (90,300x50) 4,515,000
Subscribed shares capital, 4,500 shares (4,500x50) 225,000
Total 4,740,000
Additional paid in Capital
In excess of stated value 743,500
Total paid in Capital 5,483,500
Retained Earnings 175,000
Total shareholder's Equity 5,658,500

c Share Capital 4,515,000

Subscribed shares capital 225,000
Legal Capital 4,740,000
value common stock. A stated value of P50 was decided upon by the Board of Directors. The following transactions t
rough December 31 using both the memorandum method and the journal entry method. Use "In Excess of Stated Value&quo
Date Particulars Debit Credit
1-Apr Unissued share capital (150,000x50) 7,500,000
Authorized share capital 7,500,000
To record authorization

Cash (40,000x50) 2,000,000

Unissued share capital 2,000,000
Received cash for 40,000 shares sold

30-Apr Organization expense 19,500

Unissued share capital (300x50) 15,000
In excess of stated value (19,500 - 15,000) 4,500
Issued 300 shares to corporate lawyer for legal services

1-May Same Entry

13-May Building 1,500,000

Land 1,000,000
Unissued share capital (40,000x50) 2,000,000
In excess of stated value (2,500,000 - 2,000,000)
Issued 40,000 shares to Atlas Company in exchange for building and land

18-Jul Cash (10,000x64) 640,000

Unissued share capital (10,000x50) 500,000
In excess of stated value (640,000 - 500,000) 140,000
Issued 10,000 shares to Neptune Company at 64 share

20-Dec Same Entry

31-Dec Same Entry

er 31 using a comparative format for these two methods
Matt Corporation
Shareholder's Equity
As of December 31,2021
Paid in Capital
Authorized 150,000 shares,
P50 stated value 7,500,000
Less: Unissued share capital,90,300 shares 2,985,000
Share Capital, 90,300 shares (90,300x50) 4,515,000
Subscribed shares capital, 4,500 shares (4,500x50) 225,000
Total 4,740,000
Additional paid in Capital
In excess of stated value 743,500
Total paid in Capital 5,483,500
Retained Earnings 175,000
Total shareholder's Equity 5,658,500
ollowing transactions took place during the first year of operation
cess of Stated Value" for contributions over the stated value. Place "same entry" in the journal entry method whe
he journal entry method whenever there is no difference in the entry.
Date
1-Mar

5-Mar

10-Mar

15-Mar

25-Mar
28-Mar

29 Mar

30-Mar
Particulars Debit
Subscription Receivable 6,750,000
Subscribed Share Capital

(135,000* P 50)
Solutions Par Value
Jolly Amount
1,000,000
Burgee 1,000,000
Wendy 1,250,000
King 1,250,000
Shake It 1,000,000
Domini 1,250,000
TOTAL 6,750,000
To Record the Subscription by the Incorporates

Cash 1,825,000
Subscription Receivable
To Record the Payment of the Subscription

Land 1,750,000
Share Capital
Share Premium
To Record the Shares in Exchange for Land at Fair Market value

Cash 550,000
Share Capital
Share Premium 
To Record the Sale of Shares for Cash

Cash 725,000
Subscription Receivable
Par Value
Jolly Amount
1,000,000
King 1,250,000
2,250,000
To Record the Payment of Jolly & King on 50% Balance

Cash 475,000
Subscription Receivable
To Record the Payment of King on 50% Balance

Subscribed Share Capital 1,250,000

Share Capital
To Record the Issued Stock Certificate
Subscription Receivable 1,200,000
Subscribed Share Capital
Share Premium
To Record the Subscription of Starbox

Cash P (1,200,000*25%) = 300,000 300,000

Subscription Receivable
To Record the 25% Payment of Starbox

Merchandise Inventory 1,200,000

Subscription Receivable
To Record the Payment in the Form Merchandise

Subscribed Share Capital 1,000,000

Share Capital
To Record the Issuance of Stock Certificate

Memorandum Entry: King Notified the Corporation of the Sale to  Henwa. The Certificate
Was Cancelled and Two New Certificates Were Issued ,to King of 15,000 Shares and  to
Henwa  of 10,000 Shares
Credit

6,750,000

Payment
500,000
200,000
275,000
300,000
300,000
250,000
1,825,000

1,825,000

1,500,000
250,000

500,000
50,000

725,000
Payment Balance 50%
500,000 500,000 Payment
250,000
300,000 950,000 on
475,000
Subscriptio
800,000 1,450,000 725,000
n

475,000

1,250,000
1,000,000
200,000

300,000

1,200,000

1,000,000