QUIZ – CORPORATE ACCOUNTING
Name: _______________________________________________
Supply what is asked. Erasures or alterations invalidate your answer. USE BALLPEN.
Problem 1:
The NEPAL Company is authorized to issue 600,000 ordinary shares of P 10 par value per share. Nepal’s accounting
year ends on December 31. The following transactions occurred in 2018, the company’s first year of operation.
a) Issued 20,000 shares at P 20 per share; received cash.
b) Issued 2,500 shares to attorneys for services in securing the corporate charter and for the preliminary legal
costs of organizing the corporation. The fair value of the service was P 85,000.
c) Issued 300 shares, valued objectively at P 15,000, to the employees instead of paying them cash wages.
d) Issued 325,000 shares in exchange for a building valued at P 3,000,000 and land valued at P 4,000,000. The
building was originally acquired by the investor for P 2,500,000 and has P 1,000,000 of accumulated
depreciation; the land was originally acquired for P 1,500,000.
1. What is the ordinary share capital balance on December 31, 2018? ______________
2. The amount of share premium to be reported on Nepal’s balance sheet at December 31, 2018 is __________
3. The amount of expense/organization expense to be charged against Nepal’s income is______________
Problem 2:
1. On January 1, 20x1, COMMISERATE CONDOLE Co. received authorization from the SEC to issue share capital of
₱2,000,000 divided into 20,000 shares with par value per share of ₱100. Of the total authorized share capital,
25% was subscribed at par value and 25% of the total subscription was paid at subscription date. On February 1,
20x1, COMMISERATE received full payment for 4,000 subscribed shares and issued the related share certificates.
On February 28, 20x1, COMMISERATE received cash subscription for 2,000 shares at par value.
Requirements:
a. Provide the necessary journal entries under (1) memorandum method and (2) journal entry method. (use the
given general journal)
Jan. 1, 20x1
Memorandum method Journal entry method
Feb. 1, 20x1
Memorandum method Journal entry method
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Feb. 28, 20x1
Memorandum method Journal entry method
b. Prepare the share capital portion of COMMISERATE’s statement of financial position as of February 28, 20x1.
Memorandum Method Journal Method
2. SECERN TO SEPARATE Co. started operations on January 1, 20x1. Its authorized capitalization is ₱2,000,000
divided into 20,000 shares with par value per share of ₱100. SECERN Co. receives cash subscriptions for 5,000
shares at ₱120 per share. On January 31, 20x1, SECERN receives subscription for 2,000 shares at ₱160 per share.
Requirement: Provide the necessary journal entries.
Date Particulars Debit Credit
Problem 3:
During its first year of operation, LEBANON Company entered into the following transactions relating to
shareholders’ equity. Lebanon’s charter authorized the issue of 2,400,000 ordinary shares P10 par per share, and
300,000 preference shares, P50 par per share.
March 14 Sold 500,000 ordinary shares for P 100 per share.
15 Issued 20,000 ordinary shares to attorneys in exchange for legal services.
15 Sold 35,000 of its ordinary shares and 10,000 preference shares for P 6,000,000.
Nov 20 Issued 1,900 of its ordinary shares in exchange for equipment for which the cash price was known to
be P 185,000.
Based on the preceding information, determine the correct balance of each of the following accounts.
a. Ordinary share capital __________________
b. Share premium – ordinary shares _______________
c. Preference Share Capital ________________
d. Share Premium – Preference Shares ________________________
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