Scribd
Upload
425 views2 pages

Quiz 1 - Part I - ARG

The document describes Mac Corporation's shareholders' equity accounts as of December 31, 201E and provides journal entries for various recapitalization scenarios involving changes to share capital such as cancelling issued shares in exchange for shares with a different par value, reducing or increasing par value, or conducting share splits.

Uploaded by

Kenji Cruz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
425 views2 pages

Quiz 1 - Part I - ARG

The document describes Mac Corporation's shareholders' equity accounts as of December 31, 201E and provides journal entries for various recapitalization scenarios involving changes to share capital such as cancelling issued shares in exchange for shares with a different par value, reducing or increasing par value, or conducting share splits.

Uploaded by

Kenji Cruz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

Mac Corporation showed the following shareholders’ equity accounts as of

December 31, 201E:

Share Capital, P150 par value, authorized 25,000 shares, issued 20,000
P 3,000,000
shares

Share Premium 200,000

Retained Earnings 240,000

Give the journal entry to record the recapitalization under each of the following
independent assumptions:

a. All the issued shares are cancelled in exchange for no par value share capital
with stated value of P125 per share.
b. All the issued shares are cancelled in exchange for no par value share capital
with stated value of P160 per share.
c. The par value is reduced to P145 per share.
d. The par value is increased to P155 per share.
e. A share split of five (5) new shares with a par value of P30 per share for each
old share is declared and affected.
f. A share split of two (2) old shares for each new share with a par value of
P300 per share is declared and affected.

Journal Entry:
a. Share Capital (old) P 3,000,000
Share Premium 200,000
Share Capital (new) (20,000 x P125) 2,500,000
Share Capital from change to PV 700,000
To record the cancellation of issued shares with a stated value of P125 per share

b. Share Capital (old) 3,000,000


Share Premium 200,000
Share Capital (new) (20,000 x P160) 3,200,000
To record the cancellation of issued shares with a stated value of P160 per share

c. Share Capital (20,000 x P5) 100,000


Share Capital from reduction of PV 100,000
To record the reduction of par value to P145 per share

d. Share Premium (20,000 x P5) 100,000


Share Capital 100,000
To record the increase of par value to P155 per share

Memo Entry:
e.
Share Capital
Authorized 25,000 shares with par value of P150 per share, issued 20,000 shares

Issued 100,000 new shares with the with par value of P30 per share to replace
20,000 old shares

Before the share split P 3,000,000


After the share split P 3,000,000

f.
Share Capital
Authorized 25,000 shares with par value of P150 per share, issued 20,000 shares

Issued 100,000 new shares with the with par value of P300 per share to replace
20,000 old shares

Before the share split P 3,000,000


After the share split P 3,000,000

You might also like