ACCOUNTING FOR CORPORATION
1. Entity A received a subscription for 2,000 shares at 18 per share on March 31, 2024. Entity A’s share
have a par value 5 per share. Entity A collected the subscription receivable on May 15, 2024. Which
of the following statement is correct?
a. Entity A should credit share premium for 13,000 on March 31, 2024.
b. Entity A should credit share premium for 26,000 on March 31, 2024.
c. Entity A should credit share premium for 13,000 on March 15, 2024.
d. Entity A should credit share premium for 26,000 on March 15, 2024.
2. Entity A has the following share capital transactions during the year:
• Issued 10,000 shares with par value of 10 per share for a total consideration of 160,000.
• Received share subscriptions for 20,000 shares at the subscription price of 22 per share. Only half
of the subscriptions were collected by the end of the year.
How much is the total share premium arising from the share transactions above?
a. 60,000
b. 320,000
c. 300,000
d. 180,000
3. Entity A was incorporated on January 1, 2024 with an authorized capitalization is 1,000,000 divided
into 100,000 shares with par value of 10 per share. The following were the share related transactions of
Entity A during the year.
• Cash subscriptions of 30,000 shares at 12 per share
• Subscriptions of 40,000 shares at 18 per share. Seventy-five percent of the subscription price
were collected during the year.
How much is the Entity A’s total shareholders’ equity after recording the transaction above?
a. 900,000
b. 680,000
c. 540,000
d. 360,000
4. Entity A’s total shareholders’ equity was 900,000 before recording the following share transactions:
• Received cash subscriptions for 10,000 shares with par value of 1 at 14 per share. Share
issuance costs amounted to 2,000.
• Received subscriptions for 20,000 shares at 20 per shares. Twenty-five percent down payment
was collected on subscription date.
• Collected the remaining unpaid subscription price for 15,000 subscribed and issued the related
share certificates. Share issuance costs amounted to 3,000.
How much is the balance of Entity A’s total shareholders’ equity after recording the transactions
above?
a. 1,490,000
b. 1,510,000
c. 1,360,000
d. 1,610,000
5. On February 26, 2024. Entity A acquires 10,000 of its own shares for 3 per share. The shares have a
par value of 1 and were selling in the stock market at 4 per share on this date. To record the reacquisition,
Entity A should
a. Debit Treasury shares account for 30,000.
b. Credit Treasury shares account for 30,000.
c. Debit Share premium account for 10,000.
d. Credit Treasury shares account for 40,000.
6. Two years ago, Entity A reacquired 2,000 of its own shares with par value of 100 per share for
240,000. Today, entity A reissues half of the treasury shares at 160 per share. The journal entry to record
the reissuance includes which of the following?
a. Credit to Retained earnings- unrestricted account for 240,000.
b. Debit to Treasury shares account for 120,000
c. Credit to Share premium- treasury shares for 80,000
d. Credit to Share premium- treasury shares for 40,000
7. Entity A acquires 10,000 of its own shares for 50. The shares have par value of 10 and were originally
issued at 15 per share. Subsequently, Entity A reissue the 10,000 shares at 48 per share. The journal
entry to record the reissuance involves which of the following?
a. Debit to Retained earnings for 20,000.
b. Credit to Cash for 480,000.
c. Debit to Share premium for 50,000.
d. Debit to Treasury shares for 50,000.
