Required: 1. Prepare the entries for the recapitalisation on July 1, 2022. Properly indicate the description for each entry. 2. How many are the outstanding ordinary shares on July 1, 2022?

The shareholders' equity of the ABC Company on June 30, 2022 is shown below: 10% Preference shares, P100 par, cumulative, 10.000 shares issued and outstanding, dividends are in arrears for 5 years P1,000,000 Ordinary shares, P100 par, 20,000 shares issued and outstanding 2,000,000 Deficit (500,000 Total shareholders' equity P2.500.000 On July 1, 2022, the following transactions occurred: a. ABC Company effected a quasi-reorganization through recapitalization whereby the ordinary shares were recalled and one new ordinary share was issued in exchange for every 2 shares of the old. The par value per share of the new shares remained at P100. b. One-half share of the new ordinary shares was issued to each outstanding preference share in liquidation of the dividends in arrears. c. The share premium arising from the recapitalization is used to wipe out the deficit. Transactions for the remainder of the year affecting shareholders' equity were as follows: Sep. 30, 2022 5,000 preference shares were called in at a premium of P10. Dividends for 3 months were paid on the shares recalled. The shares were formally retired. Oct. 30, 2022 3,000 new ordinary shares were sold at P150. Dec. 31, 2022 Profit for the 6 months ended on this date amounted to P1,100,000. ABC declared semi- annual dividend on the preference shares and P0.50 dividend on ordinary shares. The dividends are payable on January 27, 2023