The shareholders' equity of ADAM Co on January 1, 2020 appears as follows: 12% Preference share, P200 par, 20,000 shares authorized, 1,400,000 7,000 shares issued and outstanding Share premium preference Ordinary shares, P100 par, 180,000 shares authorized, 35,000 shares issued and outstanding Share Premium Ordinary Retained Earnings 175,000 3,500,000 1,750,000 4,500,000 During 2020, the following transactions occurred: Jan. 2 Issued 20,000 ordinary shares for P180 per share Feb. 7: Purchase 6,000 ordinary shares for the treasury at P200 per share Feb. 15 :Shareholders donated 5,000 entity's own ordinary shares to the corporation May 14 : Sold half of the treasury shares acquired last February 7 for P220 per share. June 27 :Sold the donated shares at P220 per share Aug 28 : Issued 4,000 preference shares to acquire special equipment with a fair value of P1,440,000 Sep 24 : Received subscription to 18,000 ordinary shares at P250 per share Sep 25 : Received cash payment for each subscriber for 40% of the ordinary shares subscription price

The shareholders' equity of ADAM Co on January 1, 2020 appears as follows: 12% Preference share, P200 par, 20,000 shares authorized, 1,400,000 7,000 shares issued and outstanding Share premium preference Ordinary shares, P100 par, 180,000 shares authorized, 35,000 shares issued and outstanding Share Premium Ordinary Retained Earnings 175,000 3,500,000 1,750,000 4,500,000 During 2020, the following transactions occurred: Jan. 2 Issued 20,000 ordinary shares for P180 per share Feb. 7: Purchase 6,000 ordinary shares for the treasury at P200 per share Feb. 15 :Shareholders donated 5,000 entity's own ordinary shares to the corporation May 14 : Sold half of the treasury shares acquired last February 7 for P220 per share. June 27 :Sold the donated shares at P220 per share Aug 28 : Issued 4,000 preference shares to acquire special equipment with a fair value of P1,440,000 Sep 24 : Received subscription to 18,000 ordinary shares at P250 per share Sep 25 : Received cash payment for each subscriber for 40% of the ordinary shares subscription price

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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Concept explainers

Stockholder's Equity

The stockholders’ equity (often referred to as the book value of the company) is the number of assets available to the stockholder after its entire liabilities is paid off. The stockholders’ equity is also sometimes referred to as owner's equity. The stockholders’ equity or book value generally includes common stock, treasury stock retained earnings. It is an indicator of a company's financial strength and is an important item on the company's balance sheet.

Question

100%

The shareholders' equity of ADAM Co on January 1, 2020 appears as follows:
12% Preference share, P200 par, 20,000 shares authorized, 1,400,000
7,000 shares issued and outstanding
Share premium-preference
Ordinary shares, P100 par, 180,000 shares authorized,
35,000 shares issued and outstanding
Share Premium-Ordinary
Retained Earnings
175,000
3,500,000
1,750,000
4,500,000
During 2020, the following transactions occurred:
Jan. 2 :Issued 20,000 ordinary shares for P180 per share
Feb. 7
: Purchase 6,000 ordinary shares for the treasury at P200 per share
Feb. 15 : Shareholders donated 5,000 entity's own ordinary shares to the corporation
May 14 : Sold half of the treasury shares acquired last February 7 for P220 per share.
June 27 : Sold the donated shares at P220 per share
Aug 28 : Issued 4,000 preference shares to acquire special equipment with a fair value
of P1,440,000
: Received subscription to 18,000 ordinary shares at P250 per share
: Received cash payment for each subscriber for 40% of the ordinary shares
subscription price
Sep 24
Sep 25
Nov 24 : Received full payment of the 10,000 shares on Sep 24 and Sep 25
Dec 31: Close net income of P1,000,000 from the income summary account to
retained earnings.
How much is the total share premium on December 31,2020?

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