Problem #9

Issuance of Shares

B. Sorima Corporation began operations on Jan. 1, 2018. The following transactions relating to shareholders' equity occurred in the first two years of the corporation's operations:

2018

Jan 1 Authorized the issuance of 2 million shares of P5 par value ordinary shares and 100,000 shares of P100 par value, 10% cumulative preference shares.

Jan 2 Issued 200,000 shares of ordinary shares for P12 cash per share.

Jan 3 Issued 100,000 shares of ordinary shares in exchange for a building valued at P820,000 and merchandise inventory valued at P380,000.

Jan 4 Paid P10,000 cash to the corporation's founders for organization activities.

Jan 5 Issued 12,000 shares of preference shares for P110 cash per share.

2019

June 4 Issued 100,000 shares of ordinary shares for P15 cash per share.

Required:

1. Prepare the journal entries to record these transactions.
2. Prepare the share capital section of the shareholders' equity as at Dec. 31, 2018 and Dec. 31, 2019.
3. Prepare the table showing dividend allocations and dividends per share for 2018 and 2019 assuming the corporation declared the following cash dividends: 2018, P50,000 and 2019, P300,000. Accomplish the requirement after studying Chapter 7.
4. Prepare the Jan. 2, 2018 journal entry for the issuance of 200,000 ordinary shares for P12 cash per share assuming:

a. Ordinary Shares is no-par without a stated value.

b. Ordinary Shares is no-par with a stated value of P10 per share.