NAME: SECTION: SCORE: PROFESSOR: Problem #20 Shareholders' Equity Transactions and Statement of Financial Position Presentation Ronzales Corporation was created on Jan. 1, 2007. The following transactions relating to shareholders' equity occurred during the first two years of the company's operations: 2007 Jan. 1 1 1 1 Authorized the issuance of 2 million shares of P5 par value ordinary shares and 100,000 shares of P100 par value preference shares. The preference share pays a 10% annual dividend and is cumulative. Issued 200,000 ordinary shares for cash at P12 per share. Issued 100,000 ordinary shares in exchange for a building valued at P820,000 and merchandise inventory valued at P380,000. Accepted subscriptions for 150,000 ordinary shares at P12 per share. The subscribers made no down payments, and the full purchase price was due on April 1, 2007. Paid a cash reimbursement to the company's founders for P100,000 for start- up costs. Issued 12,000 preference shares for cash at P110 per share. Collected the full subscription price for the January 1 ordinary shares and issued the stock. The Income Summary account for 2007 had a P125,000 credit balance before being closed to Retained Earnings; no dividends were declared on either the ordinary or preference shares. 1 1 Apr. 1 Dec. 31 2008 June 4 Issued 100,000 ordinary shares for cash at P15 per share. Declared dividends payable on January 10, 2009, as follows: Dec. 10 To preference shareholders for 2007 P120,000 To preference shareholders for 2008 P120,000 To ordinary shareholders for 2008 P300,000 The Income Summary account for 2008 had a P1 million credit balance before being closed to retained Earnings. 31 Required: 1. Prepare the journal entries to record these transactions. 2. Prepare the statement of financial position sections for the liabilities and shareholders' equity as at Dec 31, 2007, and Dec. 31, 2008. 6-55