PROBLEM 16.

Comprehensive
The following transactions relate to the stockholders' equity transactions of Monique Corporation for its first year of existence.

Jan. 7 Articles of incorporation are filed with the Philippine SEC. SEC authorized the issuance of 10,000
shares of P50 par value preferred stock and 200,000 shares of P10 par value common stock.
Jan. 28 40,000 shares of common stock are issued for P14 per share.
Feb. 3 80,000 shares of common stock are issued in exchange for land and buildings that have an
appraised value of P250,000 and P1,000,000, respectively. The stock traded at P15 per share on that date on the ove
the-counter market.
Feb. 24 2,000 shares of common stock are issued to Specter and Ross, Attorneys-at-Law, in payment
for legal services rendered in connection with incorporation. The company charged the amount to organization costs. T
market value of the stock was P16 per share.
Sep. 12 Received subscriptions for 10,000 shares of preferred stock at P53 per share. A 40 percent down
payment accompanied the subscriptions.
Oct. 1 Reacquired 5,000 ordinary shares for a total cost of P80,000
Nov. 5 Reissued 3,000 ordinary shares at P18 per share.
Dec. 10 Shareholders holding an aggregate of 5,000 shares donated their shares to Monique. The
company was able to reissue them at P12 per share.
Dec. 31 Profit and loss summary to be closed to retained earnings amounted to P300,000 (credit).

REQUIRED:
1. Prepare journal entries to record the foregoing transactions.
2. How much is the contributed capital?
3. How much is the share premium as of December 31?
4. How much is the total shareholder’s equity as of December 31?
5. How much is the legal capital?

Requirement No. 1. Journal Entries

PARTICULARS DR CR

Jan 7 The Company was authorized to issue 10,000 prefered shares, P50 par value
and 200,000 common shares, P10 par value.

Jan 28 Cash (40,000 shares x P14) 560,000

Common stock (40,00x P10) 400,000
Share premium - CS 160,000

Feb 3 Land 240,000

Building 960,000
Common Stock (80,000 x P10) 800,000
Share Premium - CS 400,000

FMV Fraction Amount for

allocation
Land 250,000 20% 1,200,000.00
Building 1,000,000 80% 1,200,000.00
1,250,000 100%

Feb 24 Organization Cost ( 2,000 xP16) 32,000

Common stock (2,000 xP10) 20,000
 Share Premium - CS 12,000

Sept 12 Cash 212,000

Subscription Receivable 318,000
Subscribed Preferred stock (10,000 xP50) 500,000
Share Premium - PS 30,000

Total subscribe shares 10,000

Issue Price 53
Total amount to be received 530,000
40% down payment 40%
Cash collection on Sept 12 212,000

Oct 1 Treasury stock (5,000 shares x P16) 80,000 16

Cash 80,000

Total amount of Treasury shares ₱ 80,000

No. of treasury shares acquired 5,000 shares
Cost per share of Treasury stock 16

Nov 5 Cash ( 3,0000 x P18) 54,000

Treasury stock (3,000 x P16) 48,000
Share Premium - TS 6,000

Dec 10 Cash (5,000 x P12) 60,000

SP - Donated Capital 60,000

Dec 31 Profit and loss summary 300,000

Retained Earnings 300,000
or its first year of existence.

issuance of 10,000
e common stock.

gs that have an
d at P15 per share on that date on the over-

-Law, in payment
arged the amount to organization costs. The

e. A 40 percent down

Monique. The

0,000 (credit).

80000 shares x P15 1,200,000.00

Allocated
amount
240,000.00
960,000.00
1,200,000.00
Requirement No. 2 Contributed Capital

Common Stock ₱ 1,220,000

Preferred Stock -
Share Premium - CS 572,000
Share Premium - PS 30,000
Share Premium - TS 6,000
Subscribed Preferred Stock 500,000
Subscription Receivable - PS - 318,000
Share Premium - Donated Capital 60,000
Total Contributed Capital ₱ 2,070,000

Common Stock
DR CR
400,000
800,000
20,000
1,220,000

Preferred Stock
DR CR

Share Premium - CS
DR CR
160,000
400,000
12,000
572,000

Share Premium - PS
DR CR
30,000

Share Premium - TS
DR CR
6,000

Subscribed Preferred Stock

DR CR
 500,000

Subscription Receivable - PS
DR CR
318,000

Share Premium - Donated Capital

DR CR
60,000

Requirement No. 3 Share Premium

Share Premium - CS ₱ 572,000

Share Premium - PS 30,000
Share Premium - TS 6,000
Share Premium - Donated Capital 60,000
Total Share Premium as at 12/31 ₱ 668,000

Requirement No. 4 Total Shareholders Equity

CONTRIBUTED CAPITAL
Common Stock 1,220,000
Preferred Stock -
Share Premium - CS 572,000
Share Premium - PS 30,000
Share Premium - TS 6,000
Subscribed Preferred Stock 500,000
Subscription Receivable - PS - 318,000
Share Premium - Donated Capital 60,000
Total Contributed Capital 2,070,000

RETAINED EARNINGS
Retained Earnings un appropriated 268,000

Retained Earnings Appropriated for Treasury shares 32,000 300,000

Treasury shares - 32,000

TOTAL SHAREHOLDERS' EQUITY 2,338,000

Requirement No. 5 Legal Capital

Common Stock 1,220,000

Preferred Stock -
Subscribed Preferred stock 500,000
LEGAL CAPITAL 1,720,000
Subcribed Share Capital
Subscription Receivable

if Subscription Receivable is collectible within 1 year - not part of the

capital computation. The Subscription Receivable is presented as par

if Subscription Receivable is collectible beyond 1 year -

then Subscription Receivable is to be deducted from Subscribed Sha

If the problem is silent regarding collection of SR - then the assumpti

SR is collectible beyond 1 yr.
Treasury shares
80,000 48,000

32,000
hin 1 year - not part of the contributed
eivable is presented as part of Current Assets

yond 1 year -
ucted from Subscribed Share Capital

n of SR - then the assumption

PROBLEM 17. Comprehensive
Casio Corp. registered with SEC and was authorized to issue 120,000 ordinary shares at P15 par
value per share. During the first year of operations, 40,000 shares were sold at P28 per share. 600
shares were issued in payment of a current operating debt of P18,600. In the first year, the net income
was P142,000.

D urin g th e ye ar, d ivid e n ds o f P3 6 ,00 0 w e re p aid to sh a re h o ld e rs. A t th e e n d of th e ye a r, to ta l

lia bilitie s w e re
P82,000. Use the given data to compute the following items at the end of the first year (show all
computations):

REQUIRED:
(1) Total liabilities and shareholders' equity
(2) Shareholders' equity
(3) Contributed capital
(4) Issued share capital (par)
(5) Outstanding share capital (par)
(6) Unissued share capital (number of shares)
(7) Share premium

PREVIOUS YEAR TRANSACTIONS

Cash ( 40,000 shares x 28) 1,120,000
Ordinary shares (40,000 x P15) 600,000
Share Premium - OS 520,000

Payable/ Liability 18,600

Ordinary shares (600 x P15) 9,000
Share Premium - OS 9,600

Income Summary 142,000

Retained Earnings 142,000

TRANSACTIONS DURING THE YEAR

Retained Earnings 36,000

Cash 36,000

RE 36,000
Dividend Payable 36,000

Dividend payab 36,000

Cash 36,000
Requirement No. 1. Total Liabilities and Sharehelders Equity

Total Liabilities 82,000

Shareholders Equity

Ordinary shares 609,000

Share Premium 529,600
Retained Earnings 106,000 1,244,600

Total Liabilities and Shareholders Equity 1,326,600

Requirement No. 2 Shareholders' Equity

Shareholders Equity

Ordinary shares 609,000

Share Premium 529,600
Retained Earnings 106,000
1,244,600

Requirement No. 3 Contributed Capital

Ordinary shares 609,000

Share Premium 529,600
1,138,600

Requirement No. 4 Issued Share Capital

Ordinary shares 609,000

Number of shares 40,600

Requiremnt No. 5. Outstanding share capital

Ordinary shares 609,000

Requirement No. 6 Unissued Share Capital (number of shares)

Authorized shares 120,000

Less : Issued shares 40,600
Unissued shares 79,400
Requirement No. 7 Share premium

Share Premium 529,600

Problem 18. Book value per share
The shareholder’s equity of Dancing Queen Co. in the statement of financial position on December 31, 2014 is as follows:

Share capital, P10 par, 110,000 shares P1,000,000

Share premium 500,000
Retained earnings 250,000
Treasury shares 10,000 shares, cost - 50,000 50,000

REQUIRED:
Compute the book value per share as of December 31, 2014 of Dancing Queen Co.?

Book value per share = Total Stockholders/ shareholders' Equity

No. Outstanding shares

Share Capital 1,000,000

Share Premium 500,000
Retained Earnings 250,000
Treasury shares - 50,000
Total Shareholders Equity 1,700,000

Share Capital 1,000,000

Par value 10

Shares issued 100,000

Less: Treasury shares 10,000
Outstanding shares 90,000
December 31, 2014 is as follows:

1,700,000
90,000

Book Value Per share 18.89