Reference no: EM132934825

Question - The Shareholders' equity section of Masada Corporation at December 31, 2019, follows:

Ordinary Shares, P10 par, 100, 000 shares authorized, 25,000

Shares issued, 4, 000 shares are in treasury P 250, 000.00

Share Premium 325, 000.00

Share Premium - Treasury 12, 000.00

Retained Earnings 198,000.00

Total P785, 000.00

Less: Treasury Stock, 4, 000 shares at cost 100, 000.00

Total Shareholders' Equity P685, 000.00

Note: A portion of retained earnings is restricted due to purchase of treasury stock.

The following transactions affecting shareholders' equity occurred during 2020:

Jan 8 Issued 10,000 shares of previously unissued ordinary shares for P26 cash per share

Jan 21 Issued 12,000 ordinary shares for a building appraised at 150, 000.00

Mar 12 Sold all of the treasury shares for P27 cash per share

June 30 Declared a 6% share dividend on all outstanding ordinary shares. The market value of the Share was P30 per share

July 10 Issued the share dividend declared on June 30.

August 1 Issued 20, 000 preference shares for P100 par per share (with preferential rate of 4%)

Oct 7 Acquired 1,100 ordinary shares for the treasury at P28 per share

Oct 18 Declared a cash dividend of P2.00 per outstanding ordinary share, payable on Dec 31, 2021 to shareholders of record on December 1.

Dec 31 paid the preference and ordinary shares cash dividends.

Dec 31 Profit for the year was P283, 000.

Requirements -

1. Prepare the necessary journal entries to record the transactions.

2. Prepare the statement of retained earnings for the year ended December 31, 2020.

3. Prepare the shareholder's equity section of the statement of financial position as at December 31, 2020.