Reference no: EM132912386

Question - Fullhouse Company began operations on January 1, 2020. Authorized were 100,000 ordinary shares of P100 par value and 50,000 convertible preference shares of 10% P100 par value.

Jan. 1 Issued 10,000 ordinary shares to the promoters in exchange for land valued at P2,500,000 and services value at P500,000.

The property has cost the promoters P1,800,000 three years before and was carried on the promoters' books at P1,500,000.

Feb. 20 Issued 15,000 preference shares at P120 per share. Each share can be converted to Five ordinary shares.

The entity paid P50,000 to an agent for selling the shares.

Mar. 10 Sold 25,000 ordinary shares for P260 per share. Issue costs amounted to P200,000.

Apr. 1 Sold 20,000 ordinary shares under share subscriptions at P350 per share.

No share certificates are issued until a subscription contract is paid in full. No cash was received.

July 15 Exchanged 12,000 ordinary shares and 20,000 preference shares for building with a fair value of P7,000,000.

The building was originally purchased for P6,500,000 by the owner and has a carrying amount of P4,800,000.

In addition, 10 ordinary shares were sold for P3,000,000 cash on same date.

Aug. 1 Received payments in full for half of the share subscription and partial payments on the rest of the subscription. Total cash received was P4,500,00.

Share certificates were issued for the subscriptions paid in full.

Aug. 31 Received notice from holders of share subscriptions for 5,000 shares that they would not pay further on the subscription because the price of the share had fallen to P190 per share.

The amount still due on those contracts was P1,500,000.

Amounts previously paid on the contracts are forfeited according to the agreement.

Dec. 31 Net income for the first year of operations was P3,000,000.

Instructions -

1. Prepare journal entries to record the transactions.

2. Present the shareholders' equity on December 31, 2020.