Problem 1. You were engaged by Madasigon Co., a publicly held company whose shares are traded in the Philippine Stock Exchange, to conduct an audit of its 2021 financial statements. You were told by the company's controller that there were numerous equity transactions that took place in 2021. The shareholders' equity accounts at December 31, 2020, had the following balances: Preferred Stock, P100 par value, 6% cumulative; 15,000 shares authorized; 9,000 shares issued and outstanding P900,000 Common Stock, P1 par value, 900,000 shares authorized; 600,000 shares issued and outstanding 600,000 Additional paid in capital 1,200,000 Retained earnings 3,300,000 Total Shareholders' equity P6,000,000 You summarized the following transactions during 2021 and other information relating to the shareholders' equity in your working papers as follows: January 6 - Issued 22,500 shares of common stock in exchange for land. On the date issued, the stock had a market price of P16.50 per share. The land had a carrying value of P210,000, and an assessed value for property taxes of P245,000. January 31 - Sold 1,200, P1,000, 12% bonds due January 31, 2031, at 98 with one detachable stock warrant attached to each bond. Interest is payable annually on January 31. The fair value of the bonds without the stock warrants is 95. The detachable warrants have a fair value of P50 each and expire on January 31, 2022. Each warrant entitles the holder to purchase 10 shares of common stock at P10 per share. February 22 - Purchased 7,500 shares of its own common stock to be held as treasury stock for P24 per share. February 28 - Subscriptions for 21,000 shares of common stock were received at P26 per share, payable 50% down and the balance by March 15. March 15 - The balance due on 18,000 shares was received and those shares were issued. The subscriber who defaulted on the 3,000 remaining shares forfeited the down payment in accordance with the subscription agreement. April 30 - Declared a dividend of inventory to common stockholders. The inventory had a carrying value of P910,000. Fair value on relevant dates were: Date of declaration (April 30) P950,000 Date of record (May 15) 900,000 Date of distribution (May 31) 920,000 August 30 - Reissued 3,000 of treasury shares for P20 per share. September 14 - There were 945 warrants detached from the bonds and exercised. November 30 - Declared a cash dividend of P2 per share to all common shareholders of record December 15. The dividend was paid on December 30. December 15 - Declared the required annual cash dividends on preferred stock for 2021. The dividend was paid on January 15, 2022. Adjusted net income after tax for 2021 was P2,585,650. Requirements: 1. Prepare the entries of the transactions above. 2. Determine the balance of the following accounts as at December 31, 2021 Common stock (Ordinary shares) Additional paid in capital (Share premiums) Unappropriated retained earnings Total stockholders' equity (shareholders' equity) Problem 1. You were engaged by Madasigon Co., a publicly held company whose shares are traded in the Philippine Stock Exchange, to conduct an audit of its 2021 financial statements. You were told by the company's controller that there were numerous equity transactions that took place in 2021. The shareholders' equity accounts at December 31, 2020, had the following balances: Preferred Stock, P100 par value, 6% cumulative; 15,000 shares authorized; 9,000 shares issued and outstanding P900,000 Common Stock, P1 par value, 900,000 shares authorized; 600,000 shares issued and outstanding 600,000 Additional paid in capital 1,200,000 Retained earnings 3,300,000 Total Shareholders' equity P6,000,000 You summarized the following transactions during 2021 and other information relating to the shareholders' equity in your working papers as follows: January 6 - Issued 22,500 shares of common stock in exchange for land. On the date issued, the stock had a market price of P16.50 per share. The land had a carrying value of P210,000, and an assessed value for property taxes of P245,000. January 31 - Sold 1,200, P1,000, 12% bonds due January 31, 2031, at 98 with one detachable stock warrant attached to each bond. Interest is payable annually on January 31. The fair value of the bonds without the stock warrants is 95. The detachable warrants have a fair value of P50 each and expire on January 31, 2022. Each warrant entitles the holder to purchase 10 shares of common stock at P10 per share. February 22 - Purchased 7,500 shares of its own common stock to be held as treasury stock for P24 per share. February 28 - Subscriptions for 21,000 shares of common stock were received at P26 per share, payable 50% down and the balance by March 15. March 15 - The balance due on 18,000 shares was received and those shares were issued. The subscriber who defaulted on the 3,000 remaining shares forfeited the down payment in accordance with the subscription agreement. April 30 - Declared a dividend of inventory to common stockholders. The inventory had a carrying value of P910,000. Fair value on relevant dates were: Date of declaration (April 30) P950,000 Date of record (May 15) 900,000 Date of distribution (May 31) 920,000 August 30 - Reissued 3,000 of treasury shares for P20 per share. September 14 - There were 945 warrants detached from the bonds and exercised. November 30 - Declared a cash dividend of P2 per share to all common shareholders of record December 15. The dividend was paid on December 30. December 15 - Declared the required annual cash dividends on preferred stock for 2021. The dividend was paid on January 15, 2022. Adjusted net income after tax for 2021 was P2,585,650. Requirements: 1. Prepare the entries of the transactions above. 2. Determine the balance of the following accounts as at December 31, 2021 Common stock (Ordinary shares) Additional paid in capital (Share premiums) Unappropriated retained earnings Total stockholders' equity (shareholders' equity)