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The articles of incorporation were received, authorizing Reverse Corporation to issue 100,000 shares of P5 par ordinary shares and 30,000 shares of P50 par preference shares.

The articles of incorporation were received, authorizing Reverse Corporation to issue 100,000 shares of P5 par ordinary shares and 30,000 shares of P50 par preference shares.

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 1: The following events and transactions relate to the shareholder's equity accounts of the Reverse Corporation in 2020: Jan 3 The articles of incorporation were received, authorizing Reverse Corporation to issue 100,000 shares of P5 par ordinary shares and 30,000 shares of P50 par preference shares. Jan 5 Received subscriptions to 25,000 ordinary shares and 13,000 preference shares. The subscription price was P15 for ordinary share and P60 for preference share; one third of the total of each class of share was received as a down payment. Jan 9 200 preference shares were issued to the lawyers in payment for legal services rendered in drawing up the articles of incorporation. A value of P56 per share was deemed appropriate. Jan 15 50% of the remaining balance of preference shares subscribed in Jan 5 was collected. Jan 31 Issued 20,000 ordinary shares in exchange for building with book value of 80,000. Feb 15 Collected the balance due on the subscribed ordinary and preference shares. The share certificates were issued. Feb 28 Received subscription of 5,000 ordinary shares at P8. 50% was collected. Mar 1 Issued 2,000 ordinary shares for cash at P6 per share. Mar 31 Accepted subscriptions to 3,800 preference shares at P62 per share. The subscribers each made down payments of 40% of the subscription price. Required: 1. Prepare journal entries using Journal entry method for the quarter ended2020. 2. Prepare the share capital section of the statement of financial position.
Transcribed Image Text:PROBLEM 1: The following events and transactions relate to the shareholder's equity accounts of the Reverse Corporation in 2020: Jan 3 The articles of incorporation were received, authorizing Reverse Corporation to issue 100,000 shares of P5 par ordinary shares and 30,000 shares of P50 par preference shares. Jan 5 Received subscriptions to 25,000 ordinary shares and 13,000 preference shares. The subscription price was P15 for ordinary share and P60 for preference share; one third of the total of each class of share was received as a down payment. Jan 9 200 preference shares were issued to the lawyers in payment for legal services rendered in drawing up the articles of incorporation. A value of P56 per share was deemed appropriate. Jan 15 50% of the remaining balance of preference shares subscribed in Jan 5 was collected. Jan 31 Issued 20,000 ordinary shares in exchange for building with book value of 80,000. Feb 15 Collected the balance due on the subscribed ordinary and preference shares. The share certificates were issued. Feb 28 Received subscription of 5,000 ordinary shares at P8. 50% was collected. Mar 1 Issued 2,000 ordinary shares for cash at P6 per share. Mar 31 Accepted subscriptions to 3,800 preference shares at P62 per share. The subscribers each made down payments of 40% of the subscription price. Required: 1. Prepare journal entries using Journal entry method for the quarter ended2020. 2. Prepare the share capital section of the statement of financial position.
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