412 Chapter 10 - Share Capital Transaction Subsequent to Original Issuance problem 10- PROBLEMS The capital a Problem 10-1 (Various Share Capital Transactions) 5% P Prefe The Jazmine Co., organized on January 1, 2014, was authorized to issue share capital as Ordi follows: 20,000 shares of 10% preference share capital, P100 par; 50,000 shares of ordinary share capital, P50 par Ordi During the remainder of the year, the following transactions were completed: Reta a. Received subscription for 10,000 preference shares at P125 and 20,000 ordinary Each prefe shares at P60. Both subscriptions were payable 50% upon subscription; the transaction. balance is due within thirty days. position du b. Received the final payment on subscription in (a). Issued shares of stock to the a. Reac subscribers. b. Prefe C. Reacquired 2,500 ordinary shares at P50. C. Issue d. The holders of preference shares converted 3,000 of their shares into ordinary d. Decl shares on a share-for-share basis. per s e. Reissued 1,500 treasury shares at P65. e. Reis f. Received 2,000 ordinary shares as donation from a major stockholder. f. The g. Sold the 2,000 shares received as donation at P56 per share. g. Rep h. Reissued remaining treasury shares at P60. Instructi All of the ordinary shares were exchanged for no-par shares with a stated value of P30. 1. Journ j. Reported profit of P1,500,000. 2. Prep k. Declared the regular cash dividend on preference share capital and a P1.00 cash Dec dividend on ordinary share capital. Problen Instructions: 1 . Joemari Give the journal entries to record the preceding transactions. (Disregard in this share c problem the appropriation of retained earnings on the acquisition of treasury shares.) account 2. Prepare the shareholders' equity section of the statement of financial position as of December 31, 2014.EXERCISES Exercise 10-1 (Retirement of Share Capital) share capital: The Joaquin Company showed the following balances related to an issuance of ordinary Ordinary Share Capital, P50 par, 200,000 shares Ordinary Share Premium P10,000,000 4,000,000 The company retired 2,000 shares of ordinary share capital. Instructions: 1 . assumptions: Record the retirement of the 2,000 ordinary shares under each of the following b . The retirement price is P45 The retirement price is P60 2. State the number of capital shares issued and outstanding immediately after the retirement. Exercise 10-2 (Accounting for Treasury Shares) The Jocson Company capital accounts as of June 30, 2014 are as follows: Ordinary Share Capital, P25 par, 100,000 shares P2,500,000 Ordinary Share Premium 1,000,000 Retained Earnings 1,500,000 On this date, 5,000 shares were reacquired at P20. On July 31, 3,500 shares were reissued at P35. Instructions: 1. Prepare the journal entries to record the acquisition and reissuance of treasury shares. 2. Prepare the shareholders' equity section of the statement of financial position as of July 31.Instructions: capital at re of the 1. Prepare the necessary journal entry to record each of the following independent transactions: P50 per The company undertakes a 5 for 1 share split. C. The company undertakes a 1 for 4 share split. One new ordinary share with a par value of P15 is issued in exchange for sequent d. one ordinary share with a par value of P25. One new ordinary share with a stated value of P25 is issued in exchange for one ordinary share with a par value of P25. tion and 2. State the number of capital shares issued and outstanding for each independent transaction. Exercise 10-6 (Acquisition of Treasury Shares and Conversion of Preference Shares ar value into Ordinary Shares) es were Jazul Company had the following equity balances reported in its December 31, 2013 statement of financial position ed into 10,000, 10% Preference Share Capital, convertible, P100 par, P1,000,000 500,000 Ordinary Share Capital, P5 stated value, P2,500,000 Preference Share Premium, P200,000 Paid-in capital in Excess of Stated Value, P1,500,000 Retained Earnings, P1,200,000 During 2014, the following transactions relating to share capital have taken place: a. 5,000 ordinary shares were reacquired at P10. Subsequently, 4,000 shares were reissued at P12 per share and the. 1,000 shares were reissued at P7 per share. shares b. 1,000 preference shares were converted into ordinary shares. Ten ordinary shares were issued for every preference share converted. Instructions: 1. Prepare journal entries to record the preceding transactions. 2. State the number of preference shares and ordinary shares issued and outstanding.410 Chapter 10 - Share Capital Transaction Subsequent to Original Issuance Instru Exercise 10-3 (Reacquisition of Shares through Donation) In 2014, the Jolo Company issued 150,000 shares of its P10 par ordinary share capital at 1. P25. In 2015, a major stockholder donated 5,000 shares when the market value of the share capital is P40 per share. Subsequently, all the donated shares were sold at P50 per share. Instructions: 1. Prepare entries to record the receipt of the donated shares and their subsequent sale using the two alternative methods of recording. 2. State the number of capital shares issued and outstanding after the donation and 2. after the sale of the donated shares. Exercise 10-4 (Conversion of Preference Shares into Ordinary Shares) Exe into The Jazam Company has 50,000 shares of convertible preference share capital, par value P50 and 100,000 shares of P10 par ordinary share capital. The preference shares were Jaz originally issued at P75. stat On September 6, 2014, three thousand (3,000) preference shares were converted into ordinary shares. Instructions: 1. Record the conversion of preference shares into ordinary shares assuming: a. b Each preference share is converted into 4 ordinary shares C . Each preference share is converted into 10 ordinary shares Each preference share is converted into 8 ordinary shares 2. State the number of issued and outstanding preference shares and ordinary shares for each of the three assumptions. Exercise 10-5 (Share Split and Reverse Share Split; Recapitalization) On June 30, 2014, the capital accounts of Japorms Company are as follows: Ordinary Share Capital, P20 par, 50,000 shares Ordinary Share Premium P1,000,000 200,000