Share Issuances for Cash and Non-Cash Considerations 0o Jan. 1, 2018, the following accounts and their balances appeared in the ledger of Fuentes Corporation: Preference P9 Shares, P100 par, 10,000 shares authorized, 5,000 shares issued Share Premium-Preference Ordinary Shares, P20 par, 100,000 shares authorized, 75,000 shares issued Share Premium-Ordinary Retained Earnings P 500,000 80,000 1,500,000 125,000 505,000 At the annual shareholders' meeting on Feb. 11, the board of directors presented a plan for modernizing and expanding plant operations at a cost of approximately P600,000. The plan provided (a) that the corporation borrow P175,000, (b) that 1,000 shares of the unissued preference shares be issued through an underwriter, and (c) that a building valued at P280,000, and the land on which it is located, valued at P50,000, be acquired in accordance with preliminary negotiations by the issuance of 15,000 ordinary shares. The plan was approved by the shareholders and accomplished by the following transactions: Issued 15,000 ordinary shares in exchange for land and a building, according to the plan. Mar. 3 Issued 1,000 preference shares, receiving P105 per share in cash from the underwriter. 15 31 Borrowed P175,000 from Philippine National Bank, giving a 12% mortgage note. No other transactions occurred during March. Required: 1. Journalize the entries to record the foregoing transactions. 2. Prepare the shareholders' equity section of the statement of financial position as at March 31, 2018.
Share Issuances for Cash and Non-Cash Considerations 0o Jan. 1, 2018, the following accounts and their balances appeared in the ledger of Fuentes Corporation: Preference P9 Shares, P100 par, 10,000 shares authorized, 5,000 shares issued Share Premium-Preference Ordinary Shares, P20 par, 100,000 shares authorized, 75,000 shares issued Share Premium-Ordinary Retained Earnings P 500,000 80,000 1,500,000 125,000 505,000 At the annual shareholders' meeting on Feb. 11, the board of directors presented a plan for modernizing and expanding plant operations at a cost of approximately P600,000. The plan provided (a) that the corporation borrow P175,000, (b) that 1,000 shares of the unissued preference shares be issued through an underwriter, and (c) that a building valued at P280,000, and the land on which it is located, valued at P50,000, be acquired in accordance with preliminary negotiations by the issuance of 15,000 ordinary shares. The plan was approved by the shareholders and accomplished by the following transactions: Issued 15,000 ordinary shares in exchange for land and a building, according to the plan. Mar. 3 Issued 1,000 preference shares, receiving P105 per share in cash from the underwriter. 15 31 Borrowed P175,000 from Philippine National Bank, giving a 12% mortgage note. No other transactions occurred during March. Required: 1. Journalize the entries to record the foregoing transactions. 2. Prepare the shareholders' equity section of the statement of financial position as at March 31, 2018.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Share Issuances for Cash and Non-Cash Considerations
0n Jan. 1, 2018, the following accounts and their balances appeared in the ledger of
Fuentes Corporation:
Preference P9 Shares, P100 par, 10,000 shares
authorized, 5,000 shares issued
Share Premium-Preference
P 500,000
80,000
Ordinary Shares, P20 par, 100,000 shares authorized,
75,000 shares issued
Share Premium-Ordinary
Retained Earnings
1,500,000
125,000
505,000
At the annual shareholders' meeting on Feb. 11, the board of directors presented a plan
for modernizing and expanding plant operations at a cost of approximately P600,000.
The plan provided (a) that the corporation borrow P175,000, (b) that 1,000 shares of the
unissued preference shares be issued through an underwriter, and (c) that a building
valued at P280,000, and the land on which it is located, valued at P50,000, be acquired
in accordance with preliminary negotiations by the issuance of 15,000 ordinary shares.
The plan was approved by the shareholders and accomplished by the following
transactions:
Issued 15,000 ordinary shares in exchange for land and a building,
according to the plan.
Mar. 3
Issued 1,000 preference shares, receiving P105 per share in cash
from the underwriter.
15
Borrowed P175,000 from Philippine National Bank, giving a 12%
mortgage note.
31
No other transactions occurred during March.
Required:
1. Journalize the entries to record the foregoing transactions.
2. Prepare the shareholders' equity section of the statement of financial position as at
March 31, 2018.
Shot on Y15
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