Required:

Prepare journal entries to record the transactions as well as the shareholders' equity as of December 31, 2020.

PROBLEM NO. 7 Fullhouse Company began operations on January 1, 2020. Authorized were 100,000 ordinary shares of P100 par value and 50,000 convertible preference shares of 10% P100 par value. The following transactions involving the shareholders' equity occurred during the first year of operations: Jan. 1 Issued 10,000 ordinary shares to the promoters in exchange for land valued at P2,500,000 and services valued at P500,000 The property had cost the promoters P1,800,000 three years before and was carried on the promoters' books at P1,500,000 Feb. 20 Issued 15,000 preference shares for P120 per share. Each can be converted to five ordinary shares. The entity paid 50,000 to an agent for selling the shares. Mar. 10 Sold 25,000 ordinary shares for $260 per share. Issue costs amounted to P200,000. Apr. 1 Sold 20,000 ordinary shares under share subscriptions at 350 per share. No share certificates are issued until a subscription contract is paid in full. No cash was received. July 15 Exchanged 12,000 ordinary shares and 20,000 preference shares for a building with a fair value of 27,000,000 The building was originally purchased for P6,500,000 by the owner and has a carrying amount of 4,800,000 In addition, 10,000 ordinary shares were sold for P3,000,000 cash on same date. Aug. 1 Received payments in full for half of the share subscriptions and partial payments on the rest of the subscriptions. Total cash received was 4,500,000 Share certificates were issued for the subscription paid in full. Aug. 31 Received notice from holders of shares subscriptions for 5,000 shares that they would not pay further n the subscriptions because the price of the share had fallen to 190 per share. The amount still due on those contracts was P1,500,000 Amounts previously paid on the contracts are forfeited according to the agreement. Dec. 31 Net income for the first year of operations was P3,000,000