Corporation Lecture

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Sir Win – Accounting Lectures

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Lecture 04: Share Capital


Amity Inc. was incorporated on January 2, 2021 and has been authorized to issue 500,000 shares
of P10 par ordinary shares. The following 2021 transactions relate to the initial issuance of Amity
share:

Feb 1 Amity sold subscriptions for 25,000 shares of stock. The shares have a subscription
price of P15 per share. One-third of the subscriptions price was received as a down
payment.

Mar 9 Issue 1,000 shares as payment for incorporating the business for 15,000.

Apr 13 An installment amounting to one-third of the subscription price was received.

May 19 Amity exchanged 200 shares of stock for a furniture having a fair market value of
3,800.

Jun 3 The final one-third of the subscription price was received and the shares issued.

Jul 11 Reacquired 2,500 share at P12 of Amity to be held in treasury.

Aug 8 Amity sold subscriptions for 25,000 shares of stock. The shares have a subscription
price of P18 per share. No down payment was received.

Sept 9 Reissued 1,000 share of treasury at cost.

Oct 5 Amity sold 10,000 shares for 180,000.

Nov 15 Collected 20% of the total subscription price on August 8.

Dec 31 Income at year end amounted to 250,000.

Required:
Prepare journal entries to record the transactions.
Sir Win – Accounting Lectures
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Lecture 05: Par Value and No Par Value Shares

Katrina Corporation’s articles authorized the issuance of 100,000 ordinary shares.


Katrina sold the following ordinary shares during 2020.

Feb. 12 Sold 1,000 shares for P100,000.


Mar 5 Sold 5,000 shares for P630,000.
Aug. 6 Sold 7,500 shares for P1,050,000.

Prepare journal entries to record each issuance and compute for the legal capital,
assuming that:

1. The ordinary shares has a P100 par value.


2. The ordinary shares has a P10 stated value.
3. The ordinary shares has no-par or stated value.
Sir Win – Accounting Lectures
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Lecture 06: Ordinary and Preference Shares

Allodra Corporation was organized on September 24, 2020. The corporation was
authorized to issue 10,000 shares of 10% preference shares, P100 par value, and
100,000 shares of ordinary shares, P40 par value. Record in a general journal the
following transactions completed during the firm’s first year of operations:

Sept. 24 Sold 40,000 shares of ordinary shares at par for cash.


27 Issued 1,000 shares of ordinary share to lawyer in exchange for legal
services pertaining to incorporation costing 50,000.

Oct. 7 Sold 5,000 shares of preference share at P110 for cash.


12 Issued 30,000 shares of ordinary shares in exchange for a building with
a fair market value of P1,850,000.

Journalized the above transactions.


Sir Win – Accounting Lectures
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Lecture 07: Treasury Shares


The Dec. 31, 2021 shareholders’ equity section of April Corporation’s statement of financial
position is as follows:

April Corporation
Shareholder’s Equity Section
December 31, 2021
Ordinary Shares, P10 par, 200,000 shares authorized,
150,000 shares issued and outstanding 1,500,000
Share Premium - ordinary 300,000
Retained Earnings 2,500,000
Total Shareholders’ Equity 4,300,000

Prepared the journal entries to record the following transactions that took place during January
2022:

Feb. 8 Purchased 50,000 shares of its own April for P750,000.

17 Sold 10,000 shares of the treasury stock for 20.00/share.

Mar. 29 Sold 15,000 shares of the treasury stock for 8.00/share.

Apr. 3 Sold 10,000 shares of the treasury stock for 18.00/share.

22 Retire the remaining treasury stock.


Sir Win – Accounting Lectures
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Lecture 08: Donated Capital

Marlon Corp. received the following items as donations during 2020:

Sept. 7 Lorelyn Realty gave the corporation 10 hectares of


land valued at P7,500,000.
Nov. 17 A shareholder donated 15,000 shares of Marlon P100 par ordinary
shares. The stock was selling for P450 per share on Nov. 17.
Nov. 25 Jimuel, a shareholder, donated an equipment, for corporate use. An
independent appraisal established the value of the equipment at
P750,000.
Dec. 15 5,000 of the ordinary shares received as a donation on Nov. 17 were
sold for P1,000,000.

Prepare journal entries to record the transactions related to the donations.


Sir Win – Accounting Lectures
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Lecture 09: Retained Earnings

Raisa Company reported the following shareholder’s equity on January 1, 2021:

Ordinary Shares, P5 par, 600,000 shares authorized,


200,000 shares issued and outstanding 1,000,000
Share Premium - ordinary 1,500,000
Retained Earnings appropriated for plant expansion 1,200,000
Retained Earnings 2,800,000
Total Shareholders’ Equity 6,500,000

Prepared the journal entries to record the following transactions related to


Retained Earnings

1. Reported a net profit for the year amounting 1,350,000.

2. Raisa reacquired 10,000 shares at P10.00 per share to be held as treasury.


No other transactions occurred during the year pertaining to treasury share.

3. Raisa appropriated 800,000 of retained earnings that will serve as contingency


fund.

4. Also,1,000,000 of cash was restricted for the retirement of bonds payable due
2023.

5. The plant expansion was completed during the year at a cost of 1,500,000.
Sir Win – Accounting Lectures
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Lecture 10: Share Split

On January 1, 2021, the records of Wendell Corporation showed the following


balances:

Ordinary Share, P5 par, 200,000 share authorized


20,000 share issued, 15,000 shares outstanding 100,000
Share Premium 20,000
Retained Earnings 150,000
Treasury Share, 5,000 shares at P12 cost (60,000)
Total Shareholder’s Equity 210,000

On March 11, 2021, the board of directors declared a 2-for-1 share split when the
market price of the share was P25.

1. Prepare the entries to record the share split.

2. Assuming that the entity declared a 1-for-2 reversed split, what will be the
entries to record the split down.
Sir Win – Accounting Lectures
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Lecture 11: Dividends


Joana Corporation’s board of directors declared 1,200,000 cash dividends on August 14, 2021,
payable on October 9, to shareholders of record on September 24.

Required: Prepare all the appropriate entries needed on

1. Date of Declaration

2. Date of Record

3. Date of Payment
Sir Win – Accounting Lectures
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Lecture 12: Property Dividends

Assumption #1

On December 15, 2021, MEG Corporation declared a property dividend of equipment


payable on January 15, 2022.
The carrying amount of the equipment is 2,500,000 and the fair value is 3,000,000
on December 15, 2021.
However, the fair value of the equipment is 3,200,000 on December 31, 2021 and
3,500,000 on January 15, 2022.
.
Prepare all entries related to property dividends transaction.

Assumption #2

On December 15, 2021, MEG Corporation declared a property dividend of equipment


payable on January 15, 2022.
The carrying amount of the equipment is 2,500,000 and the fair value is 2,000,000
on December 15, 2021.
However, the fair value of the equipment is 1,800,000 on December 31, 2021 and
1,500,000 on January 15, 2022.

Prepare all entries related to property dividends transaction.


Sir Win – Accounting Lectures
✓ Jokes ✓ Tagalog
✓ Stories ✓ Legit Professor
✓ Life Lessons

Lecture 13: Stock Dividends

Assume the following data:

Ordinary Shares, P100 par value,


100,000 shares issued 10,000,000
Share Premium 1,200,000
Retained Earnings 3,000,000
Total Shareholder’s Equity 14,200,000
For each of the following assumptions, prepare entries on the date of declaration
and date of payment:

1. A 20% share dividends is declared on ordinary shares.

2. A 10% share dividends is declared on ordinary shares.

The fair market value of the shares are as follows:

Declaration Date Php 150.00


Distribution Date Php 185.00
Sir Win – Accounting Lectures
✓ Jokes ✓ Tagalog
✓ Stories ✓ Legit Professor
✓ Life Lessons

Lecture 14: Dividends on Preference Share

Lovely Incorporated has the following selected accounts in its shareholder’s equity:

12% Preference Shares, P100 par,


authorized 20,000 shares, 2,000 shares
issued and outstanding 200,000
Ordinary Shares, P100 par, authorized
10,000 shares, 3,000 shares issued and
Outstanding 300,000
Share Premium – ordinary 100,000
Share Premium – preference 150,000
Retained Earnings 700,000

The board failed to declare dividends for the past two years. The current year’s
results of operations gave the board reasons to declare cash dividends of 200,000.

Required: Compute for dividends per share for preference share and ordinary
share assuming that preference share is:

1. Non-Cumulative and Non-Participating

2. Cumulative and Non-Participating

3. Non-Cumulative and Participating

4. Cumulative and Participating


Sir Win – Accounting Lectures
✓ Jokes ✓ Tagalog
✓ Stories ✓ Legit Professor
✓ Life Lessons

Lecture 15: Book Value per Share

The shareholder’s equity section of the statement of financial position of


Angelica Corporation is as follows:

10% Cumulative Preference Shares,


P1,000 par, 10,000 shares authorized,
400 shares issued and outstanding 400,000
Ordinary Shares, P100 par, 25,000 shares
authorized, 5,500 shares issued and
outstanding 550,000
Share Premium – preference 100,000
Share Premium – ordinary 700,000
Retained Earnings 950,000
Total Shareholder’s Equity 2,700,000

The preference share has a liquidation value of P1,300 and dividends are
in arrears for three years.

Compute for the book value per share for:


1. Preference share
2. Ordinary share

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