Required: Prepare the necessary journal entries on the above transactions. (In your solution) 1. Compute the Share capital-ordinary at December 31, 2021. 2. Compute the total share premium as of December 31, 2021. 3.Conpute the unappropriated retained earnings and compute the total shareholders’ equity on December 31, 2021
You were engage by Blank Space Corporation, a publicly held company whose shares are traded on the
Philippine Stock Exchange, to conduct an audit of its financial statements. You were told by the company’s
controller that there were numerous equity transactions that took place in 2021. The shareholders’ equity
accounts at December 31, 2020 had the following balances:
Share capital- Preference, P100 par value, 6 % cumulative; 30,000 shares
authorized; 18,000 shares issued and outstanding P1,800,000
Share capital-Ordinary, P1 par value, 1,800,000 share authorized 1,200,000
shares issued and outstanding 1,200,000
Share premium 2,400,000
TOTAL SHAREHOLDERS EQUITY P6,380,000
You summarized the following transactions during 2021 and other information relating to the
shareholders’ equity in your working papers as follows:
JANUARY 6, 2021- Issued 45,000 ordinary shares in exchange for land. On the date issued, the
shares had a market price of 16.5 per share. The land had a carrying value of P420,000, and an
assessed value for property taxes of P490,000.
JANUARY 31, 2021- Sold 2, 400, P1,000, 12% bonds due January 31, 2028, at 98 with one
detachable share warrants attached to each bond. Interest is payable annually on January 31. The
fair
P50 each and expire on January 31, 2022. Each warrant entitles the holder to purchase 10 ordinary
shares at P10 per share.
FEBRUARY 22, 2021- Purchased 15,000 of its own shares to be held as treasury shares for P24 per
share.
FERUARY 28, 2021- Subscription for 42,000 ordinary shares were received at P26 per share,
payable 50% down and the balance by March 15.
MARCH 15, 2021- The balance due on 36,000 ordinary shares was received and those shares were
issued. The subscriber who defaulted on the 6,000 remaining shares forfeited the down payment
in accordance with the subscription agreement.
AUGUST 30, 2021-Reissued 6,000 treasury shares for 20 per share.
SEPTEMBER 14, 2021- there were 1,890 warrants detached from the bonds and exercised.
NOVEMBER 30, 2021- Declared a cash dividend of P0.50 per share to all ordinary shareholders of
record December 15, 2021. The dividends were paid on December 30, 2021.
DECEMBER 15, 2021- Declared the annual cash dividends on
dividend was paid on January 15, 2022.
JANUARY 8, 2022- Before closing the accounting records for 2018. Blank Space Company became
aware the no
The machine was properly capitalized at P960,000 and had an estimated useful life of eight years
when purchased. The appropriate correcting entry was recorded on the same date
Adjusted net income for 2021 was P840,000
Based on the foregoing and the results of your audit, answer the following: (Ignore income tax
implications)
Required: Prepare the necessary journal entries on the above transactions. (In your solution)
1. Compute the Share capital-ordinary at December 31, 2021.
2. Compute the total share premium as of December 31, 2021.
3.Conpute the unappropriated retained earnings and compute the total shareholders’ equity on December 31, 2021
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