Question text

Parker Corporation has issued 2,000 ordinary shares and 400 preference shares for a lump sum of P72,000 cash.

Instructions

(a) Give the entry for the issuance assuming the par value of the ordinary shares was P5 and the fair value P30, and the par value of the preference shares was P40 and the fair value P50. (Each valuation is on a per share basis and there are ready markets for each class of shares.)

Cash
Share Capital--Ordinary
Share Premium--Ordinary
Share Capital--Preference
Share Premium--Preference

(b) Give the entry for the issuance assuming the same facts as (a) above except the preference shares have no ready market and the ordinary shares have a fair value of P25 per share.

Cash
Share Capital--Ordinary
Share Premium--Ordinary
Share Capital--Preference
Share Premium--Preference