PROBLEM 1.

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 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-07 - 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% downpayment 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. INVESTED CAPITAL INCLUDING EXCESS OVER PAR

126000 10400 120000 (8500) 5800 11000 267400(excess over par)

contributed Capital
OS 590,000
SP-OS 267,400
SP-TS 1500
818000

2. Poodle Corporation was organized on January 3, 2011. The firm was authorized to issue 100,000 shares of $5 par common stock.
During 2011, Poodle had the following transactions relating to shareholders' equity:

Issued 30,000 shares of common stock at $7 per share.

Issued 20,000 shares of common stock at $8 per share.
Reported a net income of $100,000.
Paid dividends of $50,000.

What is total Paid-in capital at the end of 2011? 

A. $420,000.

B. $370,000.

C. $470,000.

D. $320,000.
(30,000 x $7) + (20,000 x $8) = $370,000

3. 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 per share.

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. 200,000
June - Issued 30,000 shares @ P10 per share 150,000
9
July - Purchased 50,000 shares @ P4 per share. 50000(RE)
29
Dec. - Sold 50,000 shares held in treasury @ P8 150,000
31 per share.

REQUIRED:
What should be the total Share Premium as of December 31, 2012?
Total share Premium 550,000

4. 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 over-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. The 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? 2,388,000
3. How much is the share premium as of December 31? 668,000
4. How much is the total shareholder’s equity as of December 31? 2,656,000
5. How much is the legal capital? 1,720,000
 Date ACCT DR Cr
.`

Jan 7 Cash 2,050,000

Preference Share 50000
Common stock 2000000
Jan 28 Cash 56,000
CS 40,000
SP-CS 16,000
Feb 3 Land 2400,000
Building 960,000
CS 800,000
SP-CS 400,000
Feb 24 Organization cost 32,000
OS 20,000
SP-CS 12,000
Sep 12 Cash 212,000
SR 318,00
SPS 500,000
SP-PS 30,000
Oct 1 TS 80,000
Cash 80,000

Nov 5 Cash 54,000

TS 48,000
SP-TS 6,000
Dec 10 Cash 60,000
SP-Donated capital 60,000

Dec 31 P/L summary 300,000

RE 300,000

5.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.

During the year, dividends of P36,000 were paid to shareholders. At the end of
the year, total liabilities were
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 11,326,600
(2) Shareholders' equity 1,244,600
(3) Contributed capital 1,138,600
(4) Issued share capital (par) 609,000
(5) Outstanding share capital (par) 609,000
(6) Unissued share capital (number of shares) 79,400
(7) Share premium 529,600

6. (Treasury Shares)
Charity Corporation has the following equity account balances:

Ordinary Share Capital, P 25 par value P 500,000

Additional paid-in capital in excess of par 140,000

Retained Earnings 200,000

On September 2, the corporation reacquired its 5,000 ordinary shares at P 22. On October 27, there are
3,000 reissued treasury shares at P 25 per share. The remaining treasury shares were reissued at P 18
per share.

Requirements:

Prepare the journal entries for the transactions occurred.

Date accts Dr CR

Sep 2 TS 110,000

Cash 110,000

Oct 2 cash 75,000

TS 66,000

SP-TS 9,000

Cash 36,000

Loss 8,000

TS 44,000

7.

Presented below is the Shareholders’ Equity of Wilco Corporation beginning of the year:

15% Preference Share Capital, P 150 par P 600,000

Ordinary Share Capital, P 30 stated value 200,000

Preference Share Premium 120,000

Ordinary Share Premium 150,000

Retained Earnings 950,000

Share capital transactions occurred during the current year:

Mar-03 600 preference shares were retired at P 165 per share.

May-21 Ordinary share split for five-for-one

Jun-14 2,000 ordinary shares were reacquired at P 8 per share.

Aug-05 One thousand preference shares were converted into ordinary share with conversion ratio of 4
OS for every 1 PS.

Nov-19 Reissued 1,200 treasury shares at 12 per share.

Dec-28 P 450,000 profit for the year.

Requirements:

1. Prepare the journal entries for the transactions occurred.

Date Acct DR CR

Mar 3 Preference share 99,000

PS- retirement 90,000
Loss 9,000

May 21 No entry

June 14 TS 60,000
Cash 16,000
RE 44,000

Aug 5 No entry
 Nov 19 Cash 14,400
OS 9,600
SP-TS 4,800

Dec P/L summary 450,000

RE 450,000

2. Prepare the Shareholders’ Equity at year-end.

Preferred shares 500,000
Ordinary shares 245, 600
SP-OS -4,800
RE 494,000

3.     How many issued and outstanding shares at year-end?

a.     Ordinary Shares 245,600

b.     Preference Shares 500,000

How many ordinary shares are outstanding at year-end?

Problem 5 Components of SHE

Problem
Mara Company provided the following data at year-end:

Authorized share capital 5,000,000

Unissued share capital 2,000,000
Subscribed share capital 1,000,000
Subscription receivable 400,000
Share premium 500,000
Retained earnings unappropriated 600,000
Retained earnings appropriated 300,000
Revaluation surplus 200,000
Treasury' shares, at cost 100,000
TOTAL 5,100,000
What total amount should be reported as shareholders' equity?

Problem 6

On January 1, 2019, Penn Company began operations by issuing at P15 per share one-half of the
950,000 ordinary shares of P1 par value that had been authorized for issue.
In addition, the entity had 500,000 authorized preference shares of P5 par value.
During 2019, the entity had P1,025,000 of net income and declared P230,000 of dividend.
During 2020, the entity had the following transactions:
·       Issued 100,000 ordinary shares for P 17 per share.
·       Issued 150,000 preference shares for P8 per share.

·       Authorized the purchase of a custom-made machine to be delivered in January 2021 . The
entity restricted P300,000 of retained earnings for the purchase of the machine.
·       Issued additional 50,000 preference shares for P9 per share.
·       Reported P 1,215,000 of net income and declared on December 31,2020 a dividend of
P635,000 to shareholders of record on January 15,2021to be paid on February 1,2021.

1. What amount should be reported as total shareholders' equity on December 31,2019?

950,000/2 = 475,000
475,000
475,000 X (15-1) 6,650,000
1,025,000-230,000= 795,000
6,650,00 + 475,000 + 795,000 = 7,920,000
2. What amount should be reported as total shareholders' equity on December 31,2020?
100,000 x 17= 1,700,000
150,000 x 8 = 1,200,000
1,215,000 – 635,000= 580,000
580,000 + 300,000 = 880,000
50,000 x 9 = 450,000
1,700,000+ 1,200,000 + 880,000 + 7,920,000+ 11,700,000
11,700,000 + 450,000= 12,150,000

Problem 7 SHE
Newton Company was organized on January 1, 2019. On that date, it issued 200,000 ordinary
shares of P 10 par value at P15 per share. The entity was authorized to issue 400,000 ordinary.
shares.
During the period January 1,2019 through December 31,2020, the entity reported net income of
P750,000 and paid cash dividend of P380,000.
On January 5, 2020, the entity purchased 12,000 ordinary shares at P12 per share.

On December 31, 2020,8,000 treasury shares were sold at P8 per share and the remaining
treasury shares were retired. The entity used the cost method of accounting for treasury shares,
What amount should be reported as total shareholders' equity on December 31,2020?

200,000 shares issued for 15(200,000x15) P3,000,000

Net income 750,000
Paid-in Cash dividends (380,000)
Purchased treasury stock at 12 (144,000)
Decrease in treasury stock 96,000
Decrease in Additional Paid-in capital (32,000)
TOTAL p3,290,000