Solutions To Chapter 7
Solutions To Chapter 7
Solutions To Chapter 7
Solutions to Chapter 7
Exercise 1
a)
Aug. 1 Authorized to issue 100,000 8% preference shares at P100
par and 100,000 ordinary shares at P50 par.
Subscription Receivable-Ordinary share 3,000,000
Subscribed Ordinary Share Capital 3,000,000
Cash 1,000,000
Subscription Receivable-Ordinary Share 1,000,000
Aug. 5 Subscription Receivable-Preference Share 4,000,000
Subscribed Preference Share Capital 4,000,000
Cash 2,000,000
Subscription Receivable-Preference Share 2,000,000
Aug. 10 Cash 1,060,000
Ordinary Share Capital 1,000,000
Ordinary Share Premium 60,000
Aug. 12 Equipment 700,000
Preference Share Capital 500,000
Preference Share Premium 200,000
Aug. 30 Cash 2,000,000
Subscription Receivable-Preference Share 2,000,000
Subscribed Preference Share Capital 4,000,000
Preference Share Capital 4,000,000
Sept. 1 Cash 1,000,000
Subscription Receivable-Ordinary Share Capital 1,000,000
Sept. 30 Cash 958,333
Subscription Receivable-Ordinary Share 958,333
Subscribed Ordinary Share Capital 2,875,000
Ordinary Share Capital 2,875,000
b)
Preference Shares:
Authorized to issue 100,000 preference shares par P100
Issued 90,000 shares P4,500,000
Ordinary Shares:
Authorized to issue 100,000 ordinary shares par P50
Issued 38,750 shares 3,875,000
Subscribed 2,500 shares 125,000
Additional Paid In
Preference Share Premium 200,000
Ordinary Share Premium 60,000
Total Paid In P4,260,000
Ex .2 a)
2012
May1 Authorized to issue 50,000, 18% Cumulative
Preference shares at P100 per share
Authorized to issue 200,000 ordinary shares
At P50 per share
Subscription Receivable-Preference Shares (2,500 xP100 x 6) 1,500,000
Subscribed Preference Share Capital
To record common stock subscription of incorporators.
1,500,000
Subscription Receivable- Ordinary Shares (10,000 x P50 x 6)
Subscribed Ordinary Share Capital
To record common stock subscription of incorporators.
3,000,000
3,000,000
44
Cash
Subscription Receivable-Preference Share(1,500,000 x .25)
Subscription Receivable-Ordinary Share (3,000,000 x .25)
To record downpayment of incorporators.
1,125,000
375,000
750,000
June
15 Subscription Receivable-Preference Share(5,000 x P110)
Subscribed preference share capital (5,000 x P100)
Preference share Premium
To record subscription of various investors.
550,000
500,000
50,000
Cash (550,000 x .25)
Subscription Receivable-Preference share
To record downpayment of various investors.
137,500
137,500
17 Subscription Receivable-Ordinary Share(30,000 x P52)
Subscribed Ordinary Share Capital
Ordinary Share Premium
1,560,000
1,500,000
60,000
Cash (1,560,000 x .25)
Subscription receivable-Ordinary Share
To record downpayment of common stock subscription.
390,000
390,000
30
July
1
15
18
20
30
Cash
Subscription receivable-Preference Share
Subscription Receivable-Ordinary Share
To record first installment of incorporators.
Cash
Subscription Receivable-Ordinary Share
Subscribed Ordinary Share
Ordinary Share Capital
Cash
Subscription Receivable-Preference Share
Land
Ordinary Share Capital
Ordinary Share Premium
Cash
Subscription Receivable-Preference Share
Subscription Receivable-Ordinary Share
Subscribed Preference Share
Subscribed Ordinary Share
Preference Share Capital
Ordinary Share Capital
Cash
Subscription Receivable-Preference Share
Subscription Receivable-Ordinary Share
Subscribed Preference Share Capital
Subscribed Ordinary Share Capital
Preference Share Capital
Ordinary Share Capital
1,687,500
1,170,000
1,500,000
137,500
75,000
562,500
500,000
1,000,000
1,125,000
1,000,000
2,000,000
562,500
1,125,000
1,170,000
1,500,000
137,500
70,000
5,000
187,500
375,000
500,000
1,000,000
375,000
750,000
1,000,000
2,000,000
Preference
Share
Subscribed
Preference
Pref Share
Premium
Ordinary
Share
Subscribed
Ordinary Shares
Ordinary Share
Premium
5/1 1,500,000 3,000,000
6/15 500,000 50,000
6/17 1,500,000 60,000
7/1 1,500,000 (1,500,000)
7/18 70,000 5,000
7/20 500,000 (500,000) 1,000,000 (1,000,000)
7/30 1,000,000 (1,000,000) 2,000,000 (2,000,000)
P1,500,000 0 P50,000 P4,570,00
0
P65,000
Legal Capital P6,070,000
45
Shareholders Equity|
Paid In Capital
Authorized 50,000 18% cumulative preference shares,
at P100 par
Issued and Outstanding Preference Share, 1,500 P1,500,000
Authorized 200,000 common shares, at P50 par
Issued and Outstanding Ordinary Shares, 45,700
4,570,000
Additional Paid In Capital:
Premium on Preference Shares 50,000
Premium on Ordinary Shares 65,000 115,000
Total Paid In Capital P6,185,000
Ex. 3. a) Journal entries:
Jan 15 Unissued preference share (20,000 x P100) 2,000,000
Authorized Preference share capital 2,000,000
Unissued Ordinary Share (50,000 x P50)
Authorized Ordinary Share
2,500,000
2,500,000
20 Cash (13,000 x P60)
Unissued Ordinary Share (13,000 x P50)
Paid in Capital in excess of stated
value-ordinary share
780,000
650,000
130,000
Subscription Receivable preference share (5,000xP100)
Subscribed preference share
500,000
500,000
Cash
Subscription Receivable preference share
250,000
250,000
30 Cash (750 x P105)
Unissued preference share (750 x P1000
Preference Share Premium
78,750
75,000
3,750
Feb 21 Land (P50,000 x 2.20)
Unissued preference share (1,100 x P100)
110,000
110,000
25 Organization Expense
Cash
75,000
75,000
Mar 1 Subscription Receivable Ordinary Share (2,000 x P62)
Subscribed Ordinary Share (2,000 x P50)
Paid in capital in excess of stated value-ordinary share
124,000
100,000
24,000
Cash (124,000 x .25)
Subscription Receivable ordinary share
31,000
31,000
10 Cash
Subscription Receivable ordinary share
70,400
70,400
Subscribed ordinary share (1,200 x P50)
Unissued ordinary share
60,000
60,000
28 Cash
Subscription Receivable ordinary share
22,600
22,600
Subscribed ordinary share (800 x P50)
Unissued ordinary share
40,000
40,000
31 Income & expense summary
Retained earnings
81,000
81,000
b) Shareholders Equity Section:
Paid In Capital
Authorized preference share, 2,000 shares at P100 par
Less Unissued
P2,000,000
185,000
Issued and Outstanding Preference Share, 1,750 P1,815,000
Subscribed Preference Share P500,000
46
Less: Subscription Receivable Preference Share 250,000 250,000 P2,065,000
Authorized Ordinary Share, 50,000 at P50 stated value P2,500,000
Less: Unissued Ordinary shares, 35,000 shares 1,750,000
Issued and Outstanding Ordinary Shares, 15,000 P 750,000
Additional Paid In Capital:
Preference Share Premium 3,750
Paid In Capital in excess of Stated Value Ordinary 154,000 167,750
Total Paid In Capital P2,982,750
Retained Earnings 81,000
Total Shareholders Equity P3,063,750
c) Legal Capital:
Preference Share, issued and outstanding P 1,815,000
Subscribed Preference Share 500,000
Ordinary shares issued and outstanding 750,000
Paid in Capital in excess of stated value 154,000
Total Legal Capital P3,219,000
Ex 4.
Subscription Receivable ordinary share (5,000 x P58)
Subscribed ordinary share (5,000 x P50)
Paid in capital in excess of stated value-ordinary
290,000
250,000
40,000
Cash (290,000 x .25)
Subscription Receivable ordinary share
72,500
72,500
Cash 108,750
Subscription Receivable-ordinary shares 108,750
Cash 54,375
Subscription Receivable-ordinary shares 54,375
Subscribed Ordinary Shares 125,000
Ordinary Share Capital 125,000
Due from Highest Bidder 59,375
Subscription Receivable-Ordinary Shares 54,375
Cash 5,000
54,375 +.18 x 2.5/12)
Cash 61,414
Due from Highest Bidder 59,375
Interest Income 2,039
Subscribed Ordinary Shares 125,000
Ordinary Share Capital 125,000
Two Certificates: Jose Villa for 1,000 shares and Adela
for 1,500 shares
Ex. 5.
Ordinary Treasury Shares 59,375
Due form Highest Bidder 59,375
Subscribed Ordinary Shares 125,000
Ordinary Shares 125,000
6. Journal Entries:
2012 Jan 1 Authorized to issue 50,000 common shares at
P100 par value
Subscription Receivable-Ordinary 1,250,000
Subscribed Ordinary Share Capital 1,000,000
Ordinary Share Premium 250,000
Cash
Subscription Receivable- Ordinary Shares
312,500
312,500
31 Cash
Subscription Receivable-Ordinary Shares
890,625
890,625
Subscribed Ordinary Share Capital 950,000
47
Ordinary Share Capital 950,000
Due from Highest Bidder
Subscription Receivable Ordinary
48,250
46,875
Cash 1,375
Cash 48,250
Due from Highest Bidder 48,250
Subscribed Ordinary Share Capital 50,000
7. a)
Ordinary Share Capital 50,000
June 10 Treasury Shares Cost (500 x P80)
Cash
Reacquired 500 shares.
40,000
40,000
15 Cash
Treasury Shares (100 x P80)
Additional Paid In Capital Treasury Shares
10,000
8,000
2,000
20 Cash (150 x P60)
Additional Paid In Capital-treasury shares
Retained Earnings
Treasury Shares (150 x P80)
9,000
2,000
1,000
12,000
25 Ordinary Share Capital (175 x P100)
Treasury Shares (175 x P80)
Additional Paid In Capital Stock retirement
17,500
14,000
3,500
Shareholders Equity
Ordinary Shares, par 100, issued 9,825 of which 100
shares are in the treasury
P982,500
Paid In Capital from Stock Retirement 3,500
Retained Earnings
Free P1,193,000
Appropriated for Treasury Shares 6,000
1,199,000
Total 2,185,000
Less Treasury Shares (75 shares) (6,000)
P2,179,000
Ex. 8.
Aug 12 Cash (1,500 x 55) 82,500
Retained Earnings 7,500
Treasury Shares (1,500 x 60) 90,000
Aug 20 Cash (1,500 x 62) 93,000
Paid In Capital from Treasury Shares 3,000
Treasury Shares (1500x P60) 90,000
Aug 31 Ordinary Shares (500 x 50) 25,000
Share Premium 3,378
Paid in Capital from Treasury Shares 1,622
Treasury Shares 30,000
Shareholders Equity:
Ordinary Shares, 18,000 issued P900,000
Share Premium 121,622
Paid in capital from treasury shares 1,378
Retained Earnings 4,492,500
Ex. 9.
June 5 Preference Share Capital
Paid In Capital in Excess of Par
Retained earnings
Cash
50,000
5,000
20,000
75,000
30 Preference Share Capital
Cash
Paid In Capital from Stock Retirement
50,000
45,000
5,000
48
Shareholders Equity
Redeemable Preference Share, P100 par, 4,000 issued
and outstanding
P 400,000
Preference Share Premium 45,000
Paid In Capital from Stock Retirement 5,000
Retained Earnings 80,000
Total Shareholders Equity P530,000
10. NOVA Corp. Journal Entries:
a) July 1 Ordinary Share Capital (5,000 x P15)
Cash (5,000 x P15)
75,000
75,000
b) Dec. 1 Ordinary Share Capital
Cash (4,000 x P8.50)
34,000
34,000
11. NINA Corporation:
a) journal Entries
Mar 10 Treasury Shares
Cash
(2000 x 12)
24,000
24,000
May 15 Cash (P14 x 1000)
Treasury Shares (1000 x P12)
Paid In Capital from Treasury Shares
14,000
12,000
2,000
June 12 Cash (P11 x 500)
Paid in capital Treasury Shares
Treasury Shares (500 x P12)
5,500
500
6,000
July 25 Memorandum entry: received from Shareholders
100 shares as donated stock.
Aug. 1 Cash (P15 x 1000)
Paid in Capital from Donated Shares
15,000
15,000
Nov. 1 Treasury Shares
Merchandise Inventory
20,000
20,000
Dec. 5 Cash (P15 x 500)
Treasury Shares
Paid In Capital from Treasury Shares
7,500
5,000
2,500
10 Ordinary Shares (P10 x 500)
Share Premium Capital
(5,00/200,000 x 100,000)
Treasury Shares
Paid In Capital Stock Retirement
5,000
2,500
6,000
1,500
Retained Earnings
Appropriated for Treasury Shares
15,000
15,000
Retained Earnings
Income and Expense Summary
50,000
50,000
b) NINA Corp.
Shareholders Equity Section
As of Dec. 31, _
Capital stock. Par P10,issued 199,500 of which1,500
are in the treasury
P1,995,000
Additional paid In Capital
Share Premium
Donated Capital
Paid In From treasury Shares
Paid in From Stock Retirement
Retained Earnings
Appropriated for Treasury Shares
Unappropriated
Total
Less Treasury Shares ( 1,500 at cost )
P 97,500
15,000
4,000
1,500
15,000
535,000
118,000
550,000
2,663,000
15,000
P2,648,000
49
12. PINOY CORP
SHAREHOLDERS EQUITY SECTION
Dec. 31, 2012
Paid In Capital
18% Preference Share Capital, par value of P100
authorized 10,000 shares, issued and outstanding,
8,000 shares
P 800,000
Subscribed Preference Share Capital
Less Subscription Receivable, Preference Share
P100,000
40,000
60,000
P 860,000
Ordinary Share Capital, no par, authorized 25,000 shares
Stated value of P100, issued 15,000 shares of
which 1,000 shares are in the treasury
P1,500,000
Subscribed Ordinary Share Capital
Less Subscription Receivable, Ordinary share
P50,000
20,000
30,000
1,530,000
Total P2,390,000
Additional Paid in Capital
Premium on Preference Shares
Paid In Capital in Excess of Stated Value
Donated Capital
P 10,000
15,000
75,000
100,000
Retained Earnings
Unappropriated Retained Earnings
Appropriated Retained earnings for Treasury Shares
P 45,000
120,000
165,000
Total P2,655,000
Less Treasury Shares (at Cost) 1,000 ordinary shares 120,000
Total Shareholders Equity P2,535,000
13. Preference Shares Ordinary Shares
Authorized number of shares 50,000 shares 10,000 shares
Issued Shares 17,000 shares 5,000 shares
Unissued Shares 33,000 shares 5,000 shares
Issued and outstanding shares 17,000 shares 4,500 shares
Subscribed Shares 2,000 shares 0
Still available for subscription 31,000 shares* 5,000 shares
Unissued
Subscribed
33,000
2,000
31,000
Legal Capital
Preferred Stock, issued P1,700,000
Preferred Stock, Subscribed 200,000
Common Stock, issued 500,000
Paid in capital in excess of stated value 55,000
Total P2,455,000
14. 1) Journal Entries
2014 Jan. 10 Cash
Subscription Receivable-Preference Shares
75,000
75,000
Subscribed Preference Share
Redeemable preference Share
100,000
100,000
20 Due from highest Bidder
Subscription Receivable
75,000
75,000
Due from Highest Bidder
Cash
5,500
5,500
25 Cash
Interest Income
Due from highest Bidder
81,250
750
80,500
Subscribed Preference Shares
Redeemable Preference shars
100,000
100,000
31 Land
Redeemable Pref Shares (2,000 x P100)
Premium on Preference Shares
250,000
200,000
50,000
Feb 8 Cash
Treasury Shares
Paid In Capital from sale of Treasury Shares
45,000
36,000
9,000
50
20 Cash
Unissued Ordinary Shares (500 x P100)
Paid In Capital In Excess of Stated Value
70,000
50,000
20,000
28 Redeemable Preference Share Capital
Premium on Preference share(5/22 x 150,000)
Retained Earnings
Cash (5,000 x P120)
500,000
34,091
65,909
600,000
March 1 Cash 10,000
Paid In Capital from Treasury Shares 2,000
Treasury Shares (100 x P120) 12,000
2) Shareholders Equity Section
Paid In Capital
Redeemable Preferred Stock, par P100, authorized 50,000 shares
Authorized Common Stock, P100 stated value
Less: Unissued Common Stock
Total
P1,000,000
450,000
P1,600,000
__550,000
P2,150,000
Additional Paid In Capital
Premium on Preferred Stock
Paid In Capital in Excess of Stated value
Paid In Capital from Treasury Stock
P315,909
75,000
7,000
397,909
Total 2,547,909
Less: Treasury Stocks (200 common shares) 12,000
Total Stockholders Equity P2,535,909
3) Preference Share Ordinary Share
Authorized number of shares 50,000 10,000
Issued Shares 16,000 5,500
Unissued shares 34,000 4,500
Issued and outstanding 16,000 5,000
Still available for subscription 34,000 5,000
Legal Capital
Preferred Stock, issued
Common Stock, issued
Paid In Capital in Excess of Stated Value
Total
P1,600,000
550,000
75,000
P2,225,000
CASE PROBLEM
1) Your right over the corporation will decrease 5,000/100,000 or 5% to 5,000/300,000 or 1.67%
2) You have to buy 5% of 200,000 or 10,000 shares. Total shares will be 15,000/300,000 will still be 5%.
3) Option price of P1,250 x 10,000 shares in P12,500,000.