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Problem 1: A newly organized corporation was
authorized to issue a total capital of P 4,000,000, divided
Concept 1: Formula for computation of share capital:
into 40,000 shares, with a par value of P 100 each. The
following transactions happened during the year:
Case 1: If only 1 type of share is present
Issued Share Capital: xxx 1. The entity received a subscription of 10,000
Share Premium: xxx shares at par.
Subscribed Share Capital: xxx 2. Collected 25% of the subscription above.
Subscriptions Receivable: (xxx) 3. Collected the rest of the subscription price of the
Total Share Capital: xxx
6,000 shares above. The share certificate was
subsequently issued.
Case 2: If two types of shares is present (ordinary and
4. Sold 2,000 shares to various investors at a basket
preferred)
cash price of P 250,000.
Issued Share Capital – Ordinary xxx
Issued Share Capital – Preferred xxx Required: Prepare the journal entry using the (a)
Share Premium - Ordinary xxx MEMORANDUM and (b) JOURNAL ENTRY method.
Share Premium - Preferred xxx
Subscribed Share Capital: xxx Problem 2: Mara Company had the following data:
Subscriptions Receivable: (xxx)
Authorized share 5,000,000
Total Share Capital: xxx
capital
Unissued share capital 2,000,000
Take note that the share capital computation is the same
Subscribed share 1,000,000
whether only common stocks or both common or
capital
preferred stocks are given. The difference only lies in the
Subscriptions 400,000
presentation. receivable
Share premium 500,000
If journal entry method was used, to compute for the Treasury shares 100,000
“issued share capital,” simply get the difference between Question: What is the total share capital balance? Would
Authorized Shares and Unissued Shares. your answer change if what is asked is the shareholders’
equity?
Concept 2: Computation of Legal Capital
Problem 3: Miranda Company had the following items at
For PAR VALUE SHARES, the items included are: its shareholders’ equity as of year-end:
- the total issued shares, at PAR VALUE, Preference Share Capital, P 100 par value 2,300,000
- the total subscribed shares, at PAR VALUE Ordinary Share Capital, P 15 par value 5,250,000
Share Premium 805,000
For NO PAR VALUE SHARES, the items included are: Share Premium 2,750,000
- the total issued shares, at STATED VALUE, Subscribed Share Capital 500,000
- the total share premium from these stated Subscriptions Receivable 400,000
shares. Retained Earnings 1,900,000