ACCOUNTING FOR CORPORATIONS
PROBLEM 1:
The following are the transactions made by ABC CORP. for the year 2023.
a) ABC CORP. is authorized to issue 100,000 ordinary shares of 50 par value and 40,000 preference share of 100
par value.
b) 5,000 ordinary shares were issued for P50 cash.
c) 2,000 preference shares were issued for P110.
d) Issued 4,000 ordinary shares in exchange for a building valued at P150,000 and for utility services rendered by a
vendor worth P250,000. (The building was originally acquired by the investor for 800,000 and has 500,000)
e) Issued 1,000 preference share for P120,000. Share issuance cost amounted to 15,000.
f) Issued 4,000 ordinary share and 6,000 preference shares for a lump-sum price of P900,000. At that date, the fair
value of the ordinary share and preferred shares are P70 and P120, respectively.
g) 7,000 ordinary shares were subscribed at P65 per share and 50% cash were received as downpayment.
h) Full payment was received for the subscription of 7,000 ordinary shares. The corresponding share certificates
were issued.
i) ABC CORP. reacquired the 5,000 ordinary shares issued on letter b for P100.
j) ABC CORP reacquired the 4,000 ordinary shares issued on letter g for P60.
k) Reissued 1,000 treasury share acquired in letter i for P100.
l) Reissued another 1,000 treasury shares acquired in letter i for P115.
m) Reissued another 1,000 treasury shares acquired in letter i for P80.
n) Retired 4,000 treasury share acquired in letter j.
o) Retired the remaining treasury shares acquired in letter i.
p) ABC CO. received cash of P100,000 and Land with fair value of P500,000 and historical cost of P300,000 from a
shareholder. No conditions are attached to the donation.
q) ABC CO. received 1,000 shares with fair value of P70 per share from a shareholder as a donation.
r) ABC CO. reissues the 1,000 donated shares at P80 per share.
REQUIREMENTS:
1. Prepare all the necessary journal entries under memorandum entry method and journal entry method.
2. Compute for the balance of Share capital – OS at year end
3. Compute for the balance of Share capital – PS at year end
4. Compute for the total Issued share capital – OS
5. Compute for the total Issued share capital – PS
6. Compute for the balance of Share premium at year end
7. Compute for the balance of Treasury shares at year end
8. Compute for the balance of Retained earnings assuming Net income for the year is 5,000,000.
9. Compute for the total Legal Capital at year end
10. Compute for the total Shareholder’s equity at year end
