Reference no: EM132712629

Following is the shareholder's equity of Valdez Corporation on Jan. 1, 2018:

Ordinary Shares, P100 par P6,000,000

Share Premium 500,000

Retained Earnings 1,800,000

Transactions during 2018 and other information relating to shareholders' equity accounts were as follows:

1. On Jan. 26, Valdez reacquired for cash 5,000 shares of its ordinary shares for P110 per share.
2. On April 4, Valdez sold for cash 3,000 shares of its treasury stock for P140 per shares.
3. On June 1, Valdez declared a cash dividend of P20 per share, payable July 5, to shareholders of record on July 1.
4. On Nov. 1, Valdez declared a 2-for-1 split and changed the par value from P100 to P50. On Nov 20, shares were issued for the shares split.
5. On Dec. 5, 4,000 shares were issued in exchange for a second hand equipment. The equipment originally cost P400,000, was carried by the previous owner at a book value of P200,000 and was recently appraised at P260,000.
6. Profit for 2018 was P1,730,000.

Required:

Question 1: Prepare journal entries to record the transactions.

Question 2: Prepare shareholders' equity section of the statement of financial position on Dec. 31, 2018.