1.Taster's Choice Co. organized on June 1, 2021, was authorizedto issue as follows:

800,000, 9% convertible, P100 par preference share

2,000,000, P2.50 ordinary shares

During the remainder of the Taster's fiscal year ended May 31, 2022, the following transactions were completed in the order given:

a.240,000 shares of preference were subscribed for at P105, and 720,000 shares of ordinary were subscribed for at P26.Both subscriptions were payable 30% upon subscription, the balance in one payment.

b.The second subscription payments was received, except one subscriber for 48,000 shares of ordinary defaulted on payment.The full amount paid by this subscribers was returned and all the fully paid stock was issued.

c.120,000 shares of ordinary were received by purchase at P28.

d.Each share of preference share was converted into 4 shares of ordinary share

e.The treasury stock was exchanged for machinery with a fair market value of P3,440,000.

f.There was a 2-for-1 stock split and the stated value of the new ordinary shares is P1.25

g.Net income was P664,000.Assume that revenues and expenses have been closed to a temporary account. Income Summary

Instructions:

1.Give the journal entries to record the foregoing transaction

2.Prepare the stockholders' equity section as ofMay 31, 2022.