PROBLEM 9.

Treasury shares
On August 10, Cultura Corporation reacquired 8,000 shares of its P100 par value ordinary shares at P134. The share was origin
P110. The shares were resold on November 21 at P145.

REQUIRED:
Provide the entries required to record the reacquisition and the subsequent resale of the share using the:

(1) Cost method of accounting for treasury share.

PARTICULARS DR CR

Aug 10 Treasury shares (8,000 shares x P134) 1,072,000

Cash 1,072,000

Nov 21 Cash ( 8,000 shares x P145) 1,160,000

Treasury shares (8,000 shares xP134) 1,072,000
Share premium - Treasury shares 88,000

treasury share 1,072,000

cash 1,072,000
retained earnings-unapropriated 1,072,000
retained earnings-apropriated 1,072,000
s at P134. The share was originally issued at

using the:
PROBLEM 10. Treasury shares - Cost method
Medley Inc. had the following information during the year:
a) Medley issued 10,000 ordinary shares (P100 par) for P120 per share.
b) Medley reacquired 3,000 ordinary shares at P150 per share.
c) The corporation then reissued 1,000 of the treasury shares for P170 per share.
d) Finally, the remaining treasury shares were issued at P100 per share.

REQUIRED:
Prepare the journal entries to record above transactions.

Particulars DR CR
a. Cash (10,000 x P120) 1,200,000
Ordinary shares (10,000 x P100) 1,000,000
Share Premium - OS 200,000

b. Treasury shares ( 3,000 x P150) 450,000

Cash 450,000

c. Cash (1,000 x P170) 170,000

Treasury shares (1,000 x P150) 150,000
Share Premium - TS 20,000

d. Cash (2,000 x P 100) 200,000

SP - TS 20,000
Retained Earnings 80,000
Treasury shares (2,000 x P150) 300,000

a cash 1,200,000
ordinary share 1,000,000
share premium-os 200,000
b treasury share 450,000
cash 450,000
c cash 170,000
treasury share 150,000
share premium-ts 20,000
d cash 200,000
treasury share
share premium-ts 20,000
retained earnings
 Treasury shares 3000
Re issuance letter c 1000
2000

If resell of TS resulted to a loss

1 SP - TS
2 RE
 PROBLEM 11. Treasury share presentation
Bucks Corp. have the following information as of December 31, 2012:

Ordinary share capital, 60,000 shares, P100 par; Share premium, P60,000; Retained earnings, 2,000,000 and Treasury sh
P140 each.

Option 1 Shareholders Equity

Contributed Capital/ Paid Up Capital

Ordinary shares, 60,000 shares P100 par
Share premium - OS

Retained Earnings
Retained Earnings
Treasury shares, 5,000 shares

Total Shareholders' Equity

Option 2 Shareholders Equity

Ordinary shares, 60,000 shares P100 par

Share premium - OS
Retained Earnings
Treasury shares, 5,000 shares
Total Shareholders' Equity
ained earnings, 2,000,000 and Treasury shares, 5,000 at cost of

6,000,000
60,000 6,060,000

2,000,000
- 700,000 1,300,000

7,360,000

6,000,000
60,000
2,000,000
- 700,000
7,360,000
 PROBLEM 12. Donated capital
Pashmina Inc. is a corporation incorporated in the Philippines, during the year, certain shareholder donated to the
entity an aggregate of 10,000 ordinary shares with par value of P100. Subsequently, the 10,000 donated shares were sol

REQUIRED:
1. Prepare the journal entries to record:
a. The receipt of the donated shares
b. The subsequent sale of the donated shares
2. How would the donated capital be accounted for in the shareholder’s equity of Pashmina?

PARTICULARS Dr CR

Requirment No.1 a. The Company received 10,000 ordinary shares ( P100 par) from its shareholders.

b. Cash (10,000 x P130) 1,300,000

Share Premium - Donated Capital 1,300,000

Requirement No. 2 The donated capital is presented at the Shareholders' Equity section
as Share Premium - Donated Capital. Added to the Shareholders Equity.

MR. So an a very rich businessman donated a land with fair market value of 1M

Land 1,000,000
Other Income 1,000,000
shareholder donated to the
e 10,000 donated shares were sold for P130 per share.

Pashmina?

ar) from its shareholders.

quity section
eholders Equity.

with fair market value of 1M to ABC Company.

PROBLEM 13. Contributed capital
Nathaniel Corporation is authorized to issue 100,000 ordinary shares, P17 par value. At the beginning of
2012, 18,000 ordinary shares were issued and outstanding. These shares had been issued at P24. During
2012, the company entered into the following transactions:
Jan. 16 - Issued 1,300 ordinary shares at P25 per share.
Mar. 21 - Exchanged 12,000 ordinary shares for a building. The ordinary shares were selling at P27
per share.
May 7 - Reacquired 500 ordinary shares at P26 per share to be held in treasury.
July 1 - Accepted subscriptions to 1,000 ordinary shares at P28 per share. The contract called
for 10% down
payment with the balance due on December 1.
Sept. 20 - Sold 500 treasury shares at P29 per share.
Dec. 1 - Collected the balance due on July 1 subscriptions and issued the shares.

REQUIRED:
Compute for the total contributed capital for December 31, 2012.

2012
PARTICULARS DR CR
Jan 16 Cash (1,300 x P25) 32,500
Ordinary shares (1,300 x P17) 22,100
Share Premium - OS 10,400

Mar 21 Building (12,000 x P27) 324,000

Ordinary shares (12,000 x P17) 204,000
Share Premium - OS 120,000

May 7 Treasury shares (500 x P26) 13,000

Cash 13,000

COMPOUND ENTRIES
July 1 Cash 2,800
Subscription Receivable 25,200
Subscrbed Ordinary Share 17,000
Share Premium - OS 11,000

Sept 20 Cash ( 500 x P29) 14,500

Treasury shares ( 500 x P26) 13,000
Share Premium - TS 1,500

Dec 1 Cash 25,200

Subscription Receivable 25,200

Subscribed Ordinary shares 17,000

Ordinary Shares 17,000
 SIMPLE ENTRIES DR CR
Subscription Receivable (1,000 x P28) 28,000
Subscribed Ordinary Share (1,000 x P17) 17,000
Share Premium - OS 11,000

Cash ( 28000 x 10*) 2,800

Subscription Receivable 2,800
 Ordinary Share Capital Share Premium
Beg. Bal (18,000 x 17) 306,000 126,000 Beg
22,100.00 10,400
204,000.00 120,000
17,000.00 11,000
549,100.00 267,400

Share Premium - TS
1,500

Contributed Capital
Ordinary shares 549,100.00
Share Premium - OS 267,400
Share Premium - TS 1,500
818,000
mium
126,000 Beg balance ( 18,000 x P7)
10,400
120,000 24
11,000 17
267,400 7 SP per share

mium - TS
1,500
PROBLEM 14. Retirement of treasury shares
a) The corporation holds as treasury, 30,000 ordinary shares with P10 par value per share, at cost a
P250,000. The shares were subsequently retired.

b) West Corporation has the following information:

Ordinary share capital, 200,000 shares, P10 par, P2,000,000; Share premium - original issuance, P
Share premium - treasury, P80,000; Retained earnings P500,000; Treasure shares, 20,000 shares,
P350,000.

West Corporation subsequently decided to retire all of its treasury shares.

A. Ordinary shares (30,000 x P10) 300,000

Treasury shares (30,000 shares) 250,000
SP - treasury share retirement 50,000

B. Ordinary shares (20,000 shares x P10) 200,000

Share premium (20,000/200,000 x P400,000) 40,000
Share premium - TS 80,000
Retained Earnings 30,000
Treasury shares (20,000 shares) 350,000

350,000 350,000 -
 per share, at cost amounting

- original issuance, P400,000;

hares, 20,000 shares, at cost
PROBLEM 15. Share premium
Hello Corporation was organized on January 1, 2013, with an authorization of 1,000,000 ordinary shares with a par value of P5

During 2013, the corporation had the following equity transactions:

Jan. 4 - Issued 200,000 shares @ P5 per share.

April 8 - Issued 100,000 shares @ P7 per share.
June - Issued 30,000 shares @ P10 per share
9
July - Purchased 50,000 shares @ P4 per share.
29
Dec. - Sold 50,000 shares held in treasury @ P8
31 per share.

REQUIRED:
What should be the total Share Premium as of December 31, 2013?

Jan 4 No effect
April 8 100,000 x P2 200,000
June 9 30,000 x P5 150,000
July 29 No effect ( TS 50,000 @ P4)
Dec 31 50,000 x (Issue price 8 - Cost of 4) 4 200,000
TOTAL SHARE Premium 550,000
rdinary shares with a par value of P5 per share.

Share premium

If you have issuance in excess of PAR Value or Stated Value

Issue Price/ Sale Price 15

Par value 10

Cash 15
OS 10
SP_ OS 5

TS- Cost 6
Reissue price 8
2

Cash 8
TS 6
SP -TS 2