Issuance of Ordinary and Preference SharesVillarama Corporation was organized on Jan. 1, 2018. It is authorized to issue 20,000shares of 6%, P50 par value preference shares, and 50,000 shares of no-par ordinaryshares with a stated value of P10 per share. The following stock transactions werecompleted during the year:Jan. 10Issued 10,000 ordinary shares for cash at P35 per share.Mar. 1Issued 10,000 preference shares for cash at P55 per share.Issued 2,500 ordinary shares for land. The asking price of theland was P90,000; the fair market value of the land was P85,000.Apr. 1May 1Issued 7,500 ordinary shares for cash at P40 per share.Issued 1,000 ordinary shares to lawyers in payment of their billfor P50,000 pertaining to services rendered in helping thecorporation organize.Aug. 1Sep. 1Issued 500 ordinary shares for cash at P60 per share.Nov. 1Issued 2,000 preference shares for cash at P53 per share.Required:1. Journalize the transactions.2. Post to the shareholders' equity accounts.3. Prepare the share capital section of the shareholders' equity as at Dec. 31, 2018.

Answered: 1. Journalize the transactions. 2. Post…

1. Journalize the transactions. 2. Post to the shareholders' equity accounts. 3. Prepare the share capital section of the shareholders' equity as at Dec. 31, 2018.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Stockholder's Equity

The stockholders’ equity (often referred to as the book value of the company) is the number of assets available to the stockholder after its entire liabilities is paid off. The stockholders’ equity is also sometimes referred to as owner's equity. The stockholders’ equity or book value generally includes common stock, treasury stock retained earnings. It is an indicator of a company's financial strength and is an important item on the company's balance sheet.

Question

Issuance of Ordinary and Preference Shares
Villarama Corporation was organized on Jan. 1, 2018. It is authorized to issue 20,000
shares of 6%, P50 par value preference shares, and 50,000 shares of no-par ordinary
shares with a stated value of P10 per share. The following stock transactions were
completed during the year:
Jan. 10
Issued 10,000 ordinary shares for cash at P35 per share.
Mar. 1
Issued 10,000 preference shares for cash at P55 per share.
Issued 2,500 ordinary shares for land. The asking price of the
land was P90,000; the fair market value of the land was P85,000.
Apr. 1
May 1
Issued 7,500 ordinary shares for cash at P40 per share.
Issued 1,000 ordinary shares to lawyers in payment of their bill
for P50,000 pertaining to services rendered in helping the
corporation organize.
Aug. 1
Sep. 1
Issued 500 ordinary shares for cash at P60 per share.
Nov. 1
Issued 2,000 preference shares for cash at P53 per share.
Required:
1. Journalize the transactions.
2. Post to the shareholders' equity accounts.
3. Prepare the share capital section of the shareholders' equity as at Dec. 31, 2018.

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