Share Issuances for Cash and Non-Cash Considerations On Jan. 1, 2018, the followingaccounts and their balances appeared in the ledgerof Fuentes Corporation: Preference P9 shares, P100 par, 10,000 shares authorized, 5,000 shares issued es00.000 Share Premium-Preference 80,000 Ordinary Shares, P20 par, 100,000 shares authorized, 75,000 shares issued 1,500,000 Share Premium-ordinary 125,000 Retained Earnings sos,000 Atthe annual shareholders meeting on Feb.11, the board of directors presented a plan for modernizing and expanding plant operations ata cost of approximately P600,000. The plan provided(a) that the corporation borrow P175,000, (b) that 1,000 sharesof the unissued preferenceshares beissued throughan underwriter, and (c) that a building valued at P280,000, and the land on which it is located, valuedat P50,000, be acquiredin accordance with preliminarynegotiationsby the issuance of 15,000 ordinary shares. The plan was approvedby the shareholders and accomplished by the following transactions: Mar. 3 Issued 15,000 ordinany shares in exchange for land and a building, according to the plan. 15 Issued 1,000 preference shares, receiving P105 persharein cash from the underwriter. 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.
Share Issuances for Cash and Non-Cash Considerations On Jan. 1, 2018, the followingaccounts and their balances appeared in the ledgerof Fuentes Corporation: Preference P9 shares, P100 par, 10,000 shares authorized, 5,000 shares issued es00.000 Share Premium-Preference 80,000 Ordinary Shares, P20 par, 100,000 shares authorized, 75,000 shares issued 1,500,000 Share Premium-ordinary 125,000 Retained Earnings sos,000 Atthe annual shareholders meeting on Feb.11, the board of directors presented a plan for modernizing and expanding plant operations ata cost of approximately P600,000. The plan provided(a) that the corporation borrow P175,000, (b) that 1,000 sharesof the unissued preferenceshares beissued throughan underwriter, and (c) that a building valued at P280,000, and the land on which it is located, valuedat P50,000, be acquiredin accordance with preliminarynegotiationsby the issuance of 15,000 ordinary shares. The plan was approvedby the shareholders and accomplished by the following transactions: Mar. 3 Issued 15,000 ordinany shares in exchange for land and a building, according to the plan. 15 Issued 1,000 preference shares, receiving P105 persharein cash from the underwriter. 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.
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
On Jan. 1, 2018, the followingaccounts and their balances appeared in the ledgerof Fuentes
Corporation:
Preference P9 Shares, P100 par, 10,000 shares authorized,
5,000 shares issued
R500.000
Share Premium-Preference
80,000
Ordinary Shares, PZ0 par, 100,000 shares authorized, 75,000
shares issued
1,500,000
Share Premium-Ordinary
125,000
Retained Earnings
505,000
Atthe annual shareholders' meeting on Feb. 11, the board of directors presented a plan for
modernizing and expanding plant operations ata costof approximatelyP600,000. The plan
provided (a) that the corporation borrow P175,000, (b) that 1,000 sharesof the unissued
preferenceshares beissued through an underwriter, and (c) thata building valued at P280,000,
and the land on which it is located, valuedat P50,000, be acquiredin accordance with
preliminarynegotiationsby the issuance of 15,000 ordinary shares. The plan was approved by
the shareholders and accomplished by the following transactions:
Mar. 3
Issued 15,000 ordinary shares in exchange for land and a building,
according to the plan.
15
Issued 1,000 preference shares, receiving P105 pershare in cash from the
underwriter.
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.
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