Reference no: EM132886585

Question - Sanka, Inc. was organized on January 2, 2019, with authorized capital consisting of 400,000 shares of 10%, P200 par value preference and 1,600,000 shares of no par, no stated value ordinary. During the first 2 years of the company's existence, the following selected transactions took place.

2019

Jan. 2 Sold 80,000 shares of ordinary at P16.

Jan. 2 Sold 24,000 shares of preference at P216.

Mar 2 Sold ordinary as follows: 86,400 at P22; 21,600 at P25

July 10 A nearby piece of land, appraised at P3,200,000 was acquired for 4,800 shares of preference shares and 216,000 shares of ordinary. (Preference shares was recorded at P216, the balance being assigned to ordinary)

Dec 16 The regular dividend for preference and a P1.50 dividend for ordinary was declared.

Dec 28 Dividends declared on December 16 was paid

Dec 31 Assume the revenues and expenses were closed to temporary account, Income summary. The income summary account showed a credit balance of P3,600,000 which was transferred to Retained Earnings.

2020

Feb. 27 The corporation reacquired 96,000 shares of ordinary shares at P19. The treasury stock is carried at cost

June 17 Resold 80,000 shares of the treasury stock at P23.

July 31 Resold all of the remaining treasury stock at P18

Sept 30 The corporation sold 88,000 additional ordinary shares at P21

Dec 18 The regular dividend for preference and an P0.80 dividend for ordinary were declared,

Dec 28 Dividends declared on December 16 were paid

Dec 31 The Income Summary account showed a credit balance of P3,400,000 which was transferred to Retained Earnings.

Required -

1. Give the journal entries to record the foregoing transactions.

2. Prepare the stockholders' equity section of the balance sheet as of December 31, 2020.