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Shareholders Equity Solving Sheet

The document outlines various methods for recording share capital transactions, including memo entry, journal entry, and issuance of shares for cash or non-cash considerations. It provides detailed illustrations of share capital transactions such as subscriptions, issuance at a discount, and callable or redeemable preference shares. Additionally, it includes examples of accounting for share issuance costs and the treatment of delinquent shares.

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Norbee Gonzales
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33 views5 pages

Shareholders Equity Solving Sheet

The document outlines various methods for recording share capital transactions, including memo entry, journal entry, and issuance of shares for cash or non-cash considerations. It provides detailed illustrations of share capital transactions such as subscriptions, issuance at a discount, and callable or redeemable preference shares. Additionally, it includes examples of accounting for share issuance costs and the treatment of delinquent shares.

Uploaded by

Norbee Gonzales
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

ILLUSTRATION- MEMORANDUM METHOD

1.00 Memo entry- The entity was authorized to isse share capital of P4,000,000
divided into 40,000 shares with a par value of P100.

2.00 Subscription receivable 1,000,000.00


Subscribed share capital 1,000,000.00
(10,000 shares X P100 par value)

3.00 Cash 250,000.00


Subscription receivable 250,000.00
(P1,000,0000 X 25%)

Subcription price (6,000 X P100) 600,000.00


Less: Partial payment (P600,000 X 25%) -150,000.00
Balance 450,000.00

4.00 Cash 450,000.00


Subscription receivable 450,000.00

5.00 Subcribed share capital 600,000.00


Share capital (6,000 shares X P100) 600,000.00

6.00 Cash (5,000 shares X P100) 500,000.00


Share capital (5,000 X P100) 500,000.00

Statement presentation
Share capital, P100 par, 40,000 shares authorized,
and 11,000 shares issued 1,100,000.00
Subscribed share capital 400,000.00
Less: Subscription receivable -300,000.00
Shareholders' equity 1,200,000.00

ILLUSTRATION- JOURNAL ENTRY METHOD


1.00 Unissued share capital 4,000,000.00
Authorized share capital 4,000,000.00

2.00 Subscription receivable 1,000,000.00


Subscribed share capital 1,000,000.00

3.00 Cash 250,000.00


Subscription receivable 250,000.00

4.00 Cash 450,000.00


Subscription receivable 450,000.00

5.00 Subscribe share capital 600,000.00


Unissued share capital 600,000.00

6.00 Cash 500,000.00


Unissued share capital 500,000.00

Statement presentation
Authorized share capital, P100 par, 40,000 shares 4,000,000.00
Less: Unissued share capital, 29,000 shares -2,900,000.00
Issued share capital 1,100,000.00
Subscribed share capital, 4,000 shares 400,000.00
Less: Subscription receivable -300,000.00
Shareholders' equity 1,200,000.00

ILLUSTRATION- Issuance of share capital


PAR-VALUE SHARES
Cash (10,000 shares X P150) 1,500,000.00
Share capital (10,000 X P100) 1,000,000.00
Share premium 500,000.00

NO PAR-VALUE SHARES
Cash (20,000 shares X P80) 1,600,000.00
Share capital (20,000 X P50) 1,000,000.00
Share premium 600,000.00

ILLUSTRATION- Issuance at a discount


Cash 800,000.00
Discount on share capital 200,000.00
Share capital (10,000 shares X P100) 1,000,000.00

ILLUSTRATION- Shares issued for non-cash consideration


1st priority- Fair value of the land
Land 1,500,000.00
Share capital (10,000 shares X P100) 1,000,000.00
Share premium 500,000.00
2nd priority- Fair value of the shares
Land (10,000 shares X P180) 1,800,000.00
Share capital (10,000 shares X P100) 1,000,000.00
Share premium 800,000.00

3rd priority- Par value of the shares


Land (10,000 X P100) 1,000,000.00
Share capital (10,000 shares X P100) 1,000,000.00

ILLUSTRATION- Issuance of share capital for services


Legal expenses 120,000.00
Share capital (1,000 shares X P100) 100,000.00
Share premium 20,000.00

ILLUSTRATION- SIC, LF, JC


Listing fee- expensed immediately
Share listing fee 300,000.00
Cash 300,000.00

Stock issuance cost


if the new shares are issued at more than par value
Share premium 225,000.00
Cash 225,000.00

if the new shares are issued at par value


Share issuance costs 225,000.00
Cash 225,000.00

Allocation of Joint Costs


Newly issued and listed shares 700,000.00 7/10 350,000.00
Newly listed old existing shares 300,000.00 3/10 150,000.00
1,000,000.00 500,000.00

Share premium 350,000.00


Stock listing fee 150,000.00
Cash 500,000.00

ILLUSTRATION- Watered Shares


Land 1,000,000.00
Share capital (10,000 shares X P100) 1,000,000.00

Discount on share capital 200,000.00


Land 200,000.00

ILLUSTRATION- Deliquent Shares (No Bidders)


1.00 Subscription receivable 1,000,000.00
Subscribed share capital 1,000,000.00
(10,000 shares X P100)

2.00 Cash 600,000.00


Subscription receivable 600,000.00

3.00 Advances on deliquency sale 30,000.00


Cash 30,000.00

4.00 Treasury shares 450,000.00


Subscription receivable (balance) 400,000.00
Interest Income 20,000.00
Advances on deliquency sale 30,000.00

5.00 Subcribed share capital 1,000,000.00


Share capital 1,000,000.00

ILLUSTRATION- Callable preference shares


1.00 Cash (10,000 shares X P120) 1,200,000.00
Preference share capital (10,000 X P100) 1,000,000.00
Share premium- preference 200,000.00

2.00 Preference share capital 1,000,000.00


Share premium- preference 200,000.00
Retained earnings 300,000.00
Cash (10,000 shares X P150) 1,500,000.00

ILLUSTRATION- Redeemable preference shares


1.00 Cash 1,000,000.00
Redeemable preference shares 1,000,000.00

2.00 Interest Expense 100,000.00


Cash 100,000.00
3.00 Redeemable preference shares 1,000,000.00
Loss on redemption 200,000.00
Cash 1,200,000.00

ANOTHER ILLUSTRATION- Redeemable preference shares


2024
01/01 Cash 6,000,000.00
Redeemable preference shares 6,000,000.00

12/31 Interest expense 300,000.00


Accrued interest payable 300,000.00

2025
12/31 Interest expense 315,000.00
Accrued interest payable 315,000.00

2026
01/01 Redeemable preference shares 6,000,000.00
Accrued interest payab;e 615,000.00
Cash 6,615,000.00

ILLUSTRATION- Convertible preference shares


Case no. 1
Preference share capital 1,000,000.00
Share premium- preference shares 200,000.00
Ordinary share capital (30,000 X P30) 900,000.00
Share premium- ordinary 300,000.00

Case no. 2
Preference share capital 1,000,000.00
Share premium- preference shares 200,000.00
Retained earnings 300,000.00
Ordinary share capital (50,000 X P30) 1,500,000.00

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