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1. Prepare journal entries to record the transactions

1. Prepare journal entries to record the transactions

FINANCIAL ACCOUNTING
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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Problem 7 (with solution/explanation)

July 15 Exchanged 12,000 ordinary shares and 20,000 preference shares for a building with a fair v of P7,000,000. The building was originally purchased for P6,500,000 by the owner and has a carrying amount of P4,800,000. In addition, 10,000 ordinary shares were sold for P3,000,000 cash on same date. Aug. 1 Received payments in full for half of the share subscriptions and partial payments on the rest of the subscriptions. Total cash received was P4,500,000. Share certificates were issued for the subscriptions paid in full. Aug. 31 Received notice from holders of share subscriptions for 5,000 shares that they would not pay further on the subscriptions because the price of the share had fallen to P190 per share. The amount still due on those contracts was P1,500,000. Amounts previously paid on the contracts are forfeited according to the agreement. Dec. 31 Net income for the first year of operations was P3,000,000. Instructions: 1. Prepare journal entries to record the transactions. 2. Present the shareholders' equity on December 31.
Transcribed Image Text:July 15 Exchanged 12,000 ordinary shares and 20,000 preference shares for a building with a fair v of P7,000,000. The building was originally purchased for P6,500,000 by the owner and has a carrying amount of P4,800,000. In addition, 10,000 ordinary shares were sold for P3,000,000 cash on same date. Aug. 1 Received payments in full for half of the share subscriptions and partial payments on the rest of the subscriptions. Total cash received was P4,500,000. Share certificates were issued for the subscriptions paid in full. Aug. 31 Received notice from holders of share subscriptions for 5,000 shares that they would not pay further on the subscriptions because the price of the share had fallen to P190 per share. The amount still due on those contracts was P1,500,000. Amounts previously paid on the contracts are forfeited according to the agreement. Dec. 31 Net income for the first year of operations was P3,000,000. Instructions: 1. Prepare journal entries to record the transactions. 2. Present the shareholders' equity on December 31.
Problem 20-7 (IAA) At the beginning of current year, Fulihouse Company began aperations and was authorized to issue 100,000 ordinary chares of P100 par value and 50,000 convertible preference chares of 10% P100 par value. The following transactions involving shareholders' equity occurred during the first year of operations: 1 Issued 10,000 ordinary shares to the promoters in exchange for land valued at P2,500,000 and services valued at P500,000. Jan. The property had cost the promoters P1,800,000 three years before and was carried on the promoters' books at P1,500,000. Feb. 20 Issued 15,000 preference shares for P120 per share. Each share can be converted to five ordinary shares. The entity paid P50,000 to an agent for selling the shares. Mar. 10 Sold 25,000 ordinary shares for P260 per share. Issue costa amounted to P200,000. 1 Sold 20,000 ordinary shares under share subscriptions at P350 per share. Apr. No share certificates are issued until a subscription contract is paid in full. No cash was received,
Transcribed Image Text:Problem 20-7 (IAA) At the beginning of current year, Fulihouse Company began aperations and was authorized to issue 100,000 ordinary chares of P100 par value and 50,000 convertible preference chares of 10% P100 par value. The following transactions involving shareholders' equity occurred during the first year of operations: 1 Issued 10,000 ordinary shares to the promoters in exchange for land valued at P2,500,000 and services valued at P500,000. Jan. The property had cost the promoters P1,800,000 three years before and was carried on the promoters' books at P1,500,000. Feb. 20 Issued 15,000 preference shares for P120 per share. Each share can be converted to five ordinary shares. The entity paid P50,000 to an agent for selling the shares. Mar. 10 Sold 25,000 ordinary shares for P260 per share. Issue costa amounted to P200,000. 1 Sold 20,000 ordinary shares under share subscriptions at P350 per share. Apr. No share certificates are issued until a subscription contract is paid in full. No cash was received,
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