Reference no: EM132941135
Questions -
1. Billboard Mfg. Co. has the following shareholders' equity on the December 31, 2012 balance sheet:
Billboard Mfg. Co., Inc. Partial Statement of Financial Position Dec. 31, 2012
Shareholder's Equity Section
Paid In Capital: Ordinary Share Capital (P50 par, 100,000 shares authorized, 50, 000 shares issued and outstanding). P2, 500, 000
Ordinary Share Premium P7, 000, 000
Total Paid In Capital. P9, 500, 000
Earned Capital:
Retained Earnings P3,000,000
Total Shareholder's Equity. P12,500,000
Direction:
a. Prepare Billboard Mfg. Company's journal entries to record the following transactions that took place during January 2013:
Jan. 3 Purchased 2, 500 shares of its own Billboard stocks for P200 per share.
Jan. 6 Sold 750 treasury shares at P220 per share.
Jan. 10 Sold 1, 250 treasury shares at P180 per share.
Jan. 20 Retired the remaining 500 treasury shares.
Jan. 25 A stockholder donated 1, 000 shares which were resold at P160.
Jan. 31 Received as donation a machinery worth P500, 000 from the Japanese government. Taxes were paid in the amount of P15, 000
b. Revised shareholders equity
Q2. The flowing events and transactions relate to the stockholders' equity accounts of the Healthy Foods Corp. for 2012:
Jan. 3 The SEC approved the incorporation papers authorizing Healthy Food to issue 100,000 shares of P50 par common and 30,000 shares of P500 par preferred. 8,000 common shares were sold to the incorporators for P500,000 cash. 1, 000 shares of preferred shares were sold for cash at P600 per share. Paid for printing and registering of stock certificates and records. Charge to APIC.
Jan. 15 Subscription to 12,000 common shares were sold. The subscription price was 120% of the par; one third of the total subscription was received as a down payment.
Jan. 31 200 preferred shares were issued to a consultancy firm in payment for legal and management services rendered and billed at P100,000.
Feb. 1 One third of the subscription price of the subscribed common shares was collected.
Mar. 1 The final balance due on this date was received on the subscribed common shares. The certificates were issued for 10,000 share, but 2,000 shares were declared delinquent.
May 30 Healthy Foods received a hectare of land as a donation from Megaworld Developer. The land has a market value of P75,000.
June 3 Advertising cost for delinquent sale, P1, 500.
June 5 Delinquent shares were offered to the bidders. Santos, the lowest bidder, got 1, 000 shares after paying the amount due for the 2, 000 shares plus interest of P250.
June 20 Healthy Food Corporation purchased 2,000 common shares from one of the incorporators for P75 per share.
June 29 Healthy Food Corporation sold 500 treasury shares at P100 per share.
June 30 Appropriated retained earnings for the treasury stock balance. Net income for six months was P350, 000.
Direction:
a. Journalize each of these events and transactions.
b. Prepare the Shareholders' equity section of Healthy Food Corporation's as of June 30. Include all appropriate disclosures discussed in this chapter.
Use the T accounts to construct the Shareholders' equity section:
Preference Share Capital
Ordinary Treasury Shares
Subscribed Preference Share
Paid In capital from Treasury Shares
Preference Share Premium
Appropriation Reserve for Treasury Shares
Ordinary Share Capital
Paid In Capital from Donation
Subscribed Ordinary Share Capital
Retained Earnings
Ordinary Share Premium