CHAPTER 6

Ex 1.
1. a)
Revenues from Sales 1,600,000
Revenue from Rent 150,000
Cost of Sales 800,000
Case A Owner’s
Selling Equity:
Expenses 190,000
Artuz, Capital
Administrative Expenses P971,500 130,000
Interest Expense 25,000
Case B Partners’
IncomeEquity:
Summary 605,000
Artuz, Capital(600 +213) P 813,000
Cruz, Summary
Income Capital (400 + 152) 552,000
181,500
Income Tax Provision 181,500
Case C Shareholders’ Equity:
Case A Share Summary
Income Capital P1,500,000
423,500
Retained Earnings
Artuz, Drawings 598,500 423,500
(175,000 + 423,500)
TotalDrawings
SHE P2,098,500
Artuz, 471,500
Ex Artuz, Capital 471,500 2.
A) No Par Value Stock B) P50 Par Value Stock C)P60 Stated Value Stock
Cash P800,000 P800,000 P800,000
Case B Income Summary 605,000
Share Capital P800,000 P750,000 P 600,000
Artuz, Drawings 363,000
Share Premium 50,000 200,000
Cruz, Drawings 242,000

Ex. Case C Income Summary 181,500 3

a) Cash
Taxes Payable 2,750,000 181,500
Share Capital 2,750,000
Income Summary 423,500
b) Cash
Retained Earnings 500,000 423,500
Share “Capital 400,000
Paid In Excess of SV 100,000

c) Inventory 300,000
Share Capital 280,000
Share Premium 20,000

d. Equipment 255,000
Notes Payable 100,000
Share Capital 155,000

a) P2,750,000/50 par= 55,000 shares were issued

b) P155,000 / 100 par= 1,550 shares were issued
Ex. 4
a) Cash (20,000 x P25) 500,000
Share Capital 400,000
Share Premium 100,000

b) Land 1,250,000
Share Capital 1,200,000
Share Premium 50,000

c) Organization Cost 120,000

Share Capiital 120,000

Ex. 5
MEMO ENTRY METHOD 6. JOURNAL ENTRY METHOD

Feb 1 Authorized to issue 1,000,000 shares, Unissued Share Capital 10,000,000

P10 par value Authorized Share Capital 10,000,000
Subscription Receivable 2,500,000 Subscription Receivable 2,500,000
Subscribed Share Capital 2,500,000 Subscribed Share Capital 2,500,000
Cash 1,750,000 Cash 1,750,000
Subscription Receivable 1,750,000 Subscription Receivable 1,750,000
Subscribed Share Capital 1,000,000 Subscribed Share Capital 1,000,000
Share Capital 1,000,000 Unissued Share Capital 1,000,000
Feb 14 Cash 1,920,000 Cash 1,920,000

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 Share Capital 1,600,000 Unissued share capital 1,600,000
Share Premium 320,000 Share Premium 320,000
Mar 14 Land 3,500,000 Land 3,500,000
Share Capital 3,200,000 Unissued share capital 3,200,000
Share Premium 300,000 Share Premium 300,000
Apr 28 Organization Cost 50,000 Organization Cost 50,000
Share Capital 45,000 Unissued share capital 45,000
Share Premium 5,000 Share Premium 5,000

Best Securities Corp. Best Securities Corp.

Shareholders’ Equity Section Shareholders’ Equity Section
Paid In Capital Paid In Capital
Authorized to issue 1,000,000 shares Authorized 1,000,00 shares
Issued 584,500shares P5,845,000 At par P 10 P10,000,000
Subscribed 150,000 1,500,000 Less Unissued Share Capital 4,155,000
Less Subs Recble. 750,000 750,000 Issued and Outstanding 584,500 5,845,000
Addtl Paid In Capital Subscribed 15,000 P1,500,000
Share Premium 625,000 Less Subs. Recble 750,000 750,000
Retained Earnings (org cost) ( 50,000) Share Premium 625,000
Total Shareholders’ Equity P7,170,000 Retained Earnings (organization cost) ( 50,000)
Total Shareholders’ Equity P7,170,000

7. A) Subscription at a premium:
Subscription Receivable 240,000 C) Issuance of Stock Certificate for
Subscribed Share Capital 200,000 Subscribed shares fully paid 150,000
Share Premium 40,000 Subscribed Share Capital 150,000
Share Capital

B) Collection of Subscription: D) Stocks sold at a premium

Cash 160,000 Cash 540,000
Subscription Receivable 160,000 Share Capital 500,000
Share Premium 40,000

8. a) Authorized shares 200,000 d). 200,000 x 25% = 50,000

Less:Issued Shares 120,000 Issued 120,000
Unissued Shares 80,000 Paid In 1,560,000
b) Still Available for Should be Paid 125,000 (.25 x 50,000 x P10)
subscription P80,000 Yes

c) Legal Capital (issued) P1,200,000 e) Properties 1,060,000

Share Capital 700,000
Share Premium 360,000

e) Cash 500,000
Share Capital 500,000

Subscribed
9. a. Share Capital Share Capital Share Premium Ret Earnings
Balances P 1,200,000 P 360,000
Sold 1,000 10,000 2,000
Subscribed 10,000 P 100,000 50,000
Issued 10,000 100,000
Issued 5,000 50,000 (50,000)
Net Income 300,000
P 1,360,000 P 50,000 P 412,000 P 300,000

9. b. Share Capital Shares d) Share Capital P 1,360,000

Authorized P 2,000,000 200,000 Subscribed Share Capital 50,000
Issued 1,360,000 136,000 Legal Capital P 1,410,000
Unissued 640,000 64,000
Subscribed 50,000 5,000
c) Available For
Subscription 590,000 59,000
9 a) Entries:
1) Cash 12,000
Share Capital 10,000
Share Premium 2,000

2) Subscription Receivable 150,000

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 Subscribed Share Capital 100,000
Share Premium 50,000

3) OrganizationExpense 100,000
Share Capital 100,000

4) Cash 56,250
Subscription Receivable 56,250

Subscribed Share Cappital 50,000

Share Capital 50,000

5) Income Summary 300,000

Retained Earnings 300,000

Ex.10 a) Authorized (100,000 x P50) P5,000,000

b) 25% Minimum requirement P 1,250,000
c) Subscribed (25,000 x P50) P1,250,000

d) 25% min. required paid up ( 1,250,000 x .25) P312,500

e) Paid up P312,500

Corporation has complied with the minimum capital requirements.

11.A. Journal Entries (Memo Entry Method)

Oct. 1 Authorized to issue 500,000 shares, P50 par value

Subscription Receivable 9,000,000

Subscribed Share Capital 9,000,000

Cash 2,150,000
Subscription Receivable 2,150,000

Nov. 5 Organization Cost 150,000

Share Capital 150,000

10 Cash 600,000
Share Capital 500,000
Share Premium 100,000

Dec 01 Cash 1,725,000

Subscription Receivable 1,725,000

20 Subscription Receivable 6,600,000

Subscribed Share Capital 6,000,000
Share Premium 600,000

Cash 1,650,000
Subscription Receivable 1,650,000

23 Cash 2,187,500
Subscription Receivable 2,187,500

26 Land 3,000,000
Share Capital 2,750,000
Share Premium 250,000

28 Cash 3,075,000
Subscription Receivable 3,075,000

Subscribed Share Capital 5,500,000

Share Capital 5,500,000

P 2,150,000l

Health Spa
Shareholders’ Equity
Paid In Capital
Authorized to issue 500,000 shares,
P50 par value share capital

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 (178,000 shares) P8,900,000
Subscribed Share Capital
(190,000 shares) P 9,500,000
Less: Subscription Receivable 4,812,500 4,687,500
Additional Paid In Capital
Share Premium 950,000
Retained Earnings (org cost) ( 150,000)
Total Shareholders’ Equity P14,387,500

c. Legal Capital ( 8,900,000+ 9,500,000) P 18,400,000

d. Unissued Shares 322,000
e. Shares still available for Subscription 132,000
f. Subscription required (25,000,000 x 25%) P 6,250,000
of which P1, 562,500 should be paid up
Stocks subscribed P 9,000,000
Collected P 2,150,000

Ex 12. a. Journal Entries

Dec 1 Unissued Share Capital 10,000,000
Authorized Share Capital 10,000,000

Subscription Receivable 2,500,000

Subscribed Share Capital 2,500,000

Jan 3 Cash 420,000

Unissued Share Capital 400,000
Share Premium 20,000

4 Subscription Receivable 324,000

Subscribed Share Capital 300,000
Share Premium 24,000

Cash 81,000
Subscription Receivable 81,000

10 Organization Cost 100,000

Cash 100,000

12 Land 550,000
Unissued Share Capital 500,000
Share Premium 50,000

30 Cash 937,500
Subscription Receivable 937,500

March 31 Cash 937,500

Subscription Receivable 937,500

Subscribed Share Capital 2,500,000

Unissued Share Capital 2,500,000
June 20 Cash 162,000
Subscription Receivable 162,000
Subscribed Share Capital 200,000
Unissued Share Capital 200,000

June 30 Income Summary 375,500

Retained Earnings 375,500

11.b. Share Capital Subscribed Share Retained

Share Capital Premium Earnings
Jan. 1 25,000 shares subscribed 2,500,000
3 4,000 shares sold 400,000 20,000
4 3,000 shares subscribed 300,000 24,000
10 Organization expenses
12 5,000 shares issued 500,000 50,000

Mar 31 25,000 shares issued 2,500,000 (2,500,000)

June 20 2,000 shares issued 200,000 (200,000)
30 Net income 375,500

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 P 3,700,000 100,000 P 94,000 P375,500

13. A. Journal Entries (Memorandum Method)

Apr. 1 Authorized to issue 150,000 shares of
P50 stated value common shares

Cash (40,000 x P50) 2,000,000

Ordinary Share Capital 2,000,000

30 Organization Cost (300 x P50) 19,500

Ordinary Share Capital 15,000
PIC – In excess of Stated Value 4,500

May 1 Organization Cost 50,000

Cash 50,000

May 13 Building 1,500,000

Land 1,000,000
Ordinary Share Capital (40,000 x P50) 2,000,000
PIC In Exc of SV 500,000

July 18 Cash 640,000

Ordinary Share Capital 500,000
PIC – In excess of Stated Value 140,000

Dec 20 Subscription Receivable (4,500 x P72) 324,000

Subscribed Ordinary Share Capital 225,000
PIC – In excess of Stated Value 99,000
Cash 162,000
Subscription Receivable 162,000

31 Revenues 1,000,000
Expenses 750,000
Income and Expense Summary 250,000

Income and Expense Summary 75,000

Taxes Payable 75,000

Income & Expense Summary 175,000

Retained Earnings 175,000

B. Shareholders’ Equity
Paid In Capital
Ordinary Share Capital, authorized 150,000 shares of
P50 no Par, stated value, issued and outstanding 90,300 P4,515,000
Subscribed 225,000
Addtl Paid In Capital 743,500
PIC- In Excess of Stated Value
Retained Earnings 175,000
Total Shareholders’ Equity P5,535,500
C. Legal Capital (4,740,000+743,500) P4,954,000

14 A. Journal Entries (Memo Entry Method)

Mar 1 Authorize to issue 500,000 shares, par P50

Subscription Receivable 6,750,000

Subscribed Share Capital 6,750,000

Cash 1,825,000
Subscription Receivable 1,825,000

5 Land 1,750,000
Share Capital 1,500,000
Share Premium 250,000

10 Cash 550,000
Share Capital 500,000
Share Premium 50,000

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 15 Cash 725,000
Subscription Receivable 725,000

25 Cash 475,000
Subscription Receivable 475,000

Subscribed Share Capital 1,250,000

Share Capital 1,250,000

28 Subscription Receivable 1,200,000

Subscribed Share Capital 1,000,000
Share Premium 200,000

Cash 300,000
Subscription Receivable 300,000

29 Merchandise inventory 900,000

Subscription Receivable 900,000

Subscribed Share Capital 1,000,000

Share Capital 1,000,000

Shareholder’s Equity
Authorized 500,000 shares with P50 par
Issued and Outstanding shares, 85,000 shares 4,250,000

Subscribed Share Capital, (110,000 shares) P5,500,000

Less: Subscription Receivable 3,725,000 1,775,000
Total 6,025,000
Additional Paid In Capital
Share Premium 500,000
Total Shareholders’ Equity P6,525,000

c. SHAREHOLDERS’ JOURNAL
CERTIFICATE CANCELLED CERTIFICATE ISSUED Total Signatures Subject
Date By whom Ledger Cert. No. of Left In whose Ledger No. No. of No. of to By Laws of Corp
surrendered Folio No. Shares by name Folio Cert. Shares Shares
3/5 Macdo 3 001 30,000 30,000
5 Tia Maria 4 002 10,000 40,000
25 King 2 003 25,000 65,000
28 Starbox 1 004 20,000 85,000
30 King 3 003 25,000 King King 2 005 15,000
30 Henwa 5 006 10,000 85,000

SHAREHOLDERS’ LEDGER
Name : Starbox
Address: Page 1
CERTIFICATE CANCELLED CERTIFICATE ISSUED
Journal No. of Journal No. of
Date Folio No. Cert. shares Date Folio No. Cert. Shares
Mar. 28 1 004 20,000

Name : King
Address: Page 2
CERTIFICATE CANCELLED CERTIFICATE ISSUED
Journal No. of Journal No. of
Date Folio No. Cert. shares Date Folio No. Cert. Shares
Mar 25 1 003 25,000
Mar. 30 1 003 25,000 Mar. 30 1 005 15,000

Name : Macdo
Address: Page 3
CERTIFICATE CANCELLED CERTIFICATE ISSUED
Journal No. of Journal No. of
Date Folio No. Cert. shares Date Folio No. Cert. Shares
Mar. 5 1 001 30,000
Name : Tia Maria
Address: Page 4
CERTIFICATE CANCELLED CERTIFICATE ISSUED
Journal No. of Journal No. of
Date Folio No. Cert. shares Date Folio No. Cert. Shares
Mar. 10 1 002 10,000

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 Name : Henwa
Address: Page 6
CERTIFICATE CANCELLED CERTIFICATE ISSUED
Journal No. of Journal No. of
Date Folio No. Cert. shares Date Folio No. Cert. Shares
Mar. 30 1 006 10,000

SUBSCRIBERS’ LEDGER
Name : Burgee
Address: Page 1
STOCK SUBSCRIBED STOCK PAYMENT
No. of No. of No. of What Amount
Date Shares Installment Value Date Shares Installment Paid
Mar. 1 20,000 3 1,000,000 Mar. 1 1 200,000

Name : Dominic
Address: Page 2
STOCK SUBSCRIBED STOCK PAYMENT
No. of No. of No. of What Amount
Date Shares Installment Value Date Shares Installment Paid
Mar. 1 25,000 3 1,250,000 Mar. 1 1 250,000

Name : Jolly
Address: Page 4
STOCK SUBSCRIBED STOCK PAYMENT
No. of No. of No. of What Amount
Date Shares Installment Value Date Shares Installment Paid
Mar. 1 20,000 3 1,000,000 Mar. 1 1 500,000
15 2,000 2 250,000

Name : King
Address: Page 5
STOCK SUBSCRIBED STOCK PAYMENT
No. of No. of No. of What Amount
Date Shares Installment Value Date Shares Installment Paid
Mar. 1 25,000 3 1,250,000 Mar. 1 1 300,000
15 2 475,000
25 25,000 3 475,000

Name : Wendy
Address: Page 6
STOCK SUBSCRIBED STOCK PAYMENT
No. of No. of No. of What Amount
Date Shares Installment Value Date Shares Installment Paid
Mar. 1 25,000 3 1,250,000 Mar. 1 1 275,000

Name : Shake It
Address: Page 7
STOCK SUBSCRIBED STOCK PAYMENT
No. of No. of No. of What Amount
Date Shares Installment Value Date Shares Installment Paid
Mar. 1 20,000 3 1,000,000 Mar. 1 1 300,000

ETHICAL ISSUE

Yes, transparency is a requirement now of the SEC. Mr. Owen has to be honest and truthful, to the
corporation on one hand and to other stakeholders such as potential investors on the other hand.

LEGAL AND ACCOUNTING ISSUES

Corporation Code requires only Pre-Incorporation based on Total authorized and Total payment (not per
investor).

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