Reference no: EM132920582

Kalaw and Ragasa are partners sharing profits and losses in the ratio of 1:2, respectively. On July 1, 2018, they decided to form KR Corporation by transferring the assets and liabilities from the partnership to the corporation in exchange for its stocks.

The following is the post - closing trial balance of the partnerships:

                                                                      Debit                       Credit

Cash                                                 P 45 000

Accounts receivable (net)                      60 000

Inventory                                            90 000

Property and Equipment (net)                174 000

Liabilities                                                                        P 60 000

Kalaw, Capital                                                                   94 800

Ragasa, Capital                                                              214 200

                                                   P 369 000                       P 369 000

It was agreed that adjustment be made to the following assets to be transferred to the Corporation:

Accounts receivable P 40 000

Inventory 68 000

Property and Equipment 180 600

• KR Corporation was authorized to issue P 100 par preference stock and P10 par ordinary stock. Kalaw and Ragasa agreed to receive for their equity in the partnership 720 shares of the ordinary stock each, plus even multiples of 10 shares of preference stock for their remaining interest.

Required:

Problem 1: Compute for the total number of preference and ordinary shares to be issued by the corporation in exchange for the assets and liabilities of the partnership.