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Problem B: ACER Corporation was authorized to issue P20 par value share capital. ACER received a
subscription from Mr. Garcia for 10,000 shares at 25 per share. Mr. Garcia paid 40% and the balance is
payable at end of 60 days.
Mr. Garcia failed to pay the balance of subscription. Hence, expenses of P 5,000 for advertising the
auction sale were paid.
The following bids were received:
- James 7,000 shares
- Chris 6,000 shares
- Mike 5,000 shares
Requirements:
1. Who is the highest bidder?
2. How much is the receivable from the highest bidder?
3. How many shares were issued to Mr. Garcia?
4. Assuming that there was no bidder, what will be the entry to record the issuance of
delinquent shares?
Problem C: UST Corporation has the following capital structure on December 31, 2015:
- Ordinary shares, P20 par, 100,000 shares issued and outstanding P2,000,000
- Share premium – Ordinary 400,000
- Retained Earnings 1, 500,000
On August 10,2015, 10,000 shares were repurchased at 25.
On September 3, 2015, 5,000 shares were reissued at 28.
On November 15, 2015, 3,000 shares were reissued at 22.
1. Prepare the journal entries of the above transactions:
2. On December 12, 2015, the balances of treasury shares were retired, what is the journal
entry.
3. Assuming that the ordinary shares were initially issued at 30 per share, what is the entry
for the retirement?
Problem D: Victorias Company reported the following in its statement of stockholders’ equity on
January 1, 2015:
Common stock, P50 par value, authorized 1,000,000 shares,
issued 500,000 shares 25,000,000
Additional paid-in capital 25,000,000
Retained earnings 15,000,000
65,000,000
Less: Treasury stock, at cost, 100,000 shares 7,000,000
Total stockholders’ equity 58,000,000
INCORPORATION OF PARTNERSHIP:
Problem E: The December 31, 2015, condensed balance sheet of Rhome Services, an individual
proprietorship, follows:
Current assets P140,000
Equipment (net) 130,000
P270,000
Liabilities P 70,000
Ted Rhome, Capital 200,000
P270,000
Fair values at December 31, 2015, are as follows:
Current assets P160,000
Equipment 210,000
Liabilities 70,000
On January 2, 2015, Rhome Services was incorporated, with 10,000 shares of P5 par value common stock
issued. How much should be credited to additional paid-in capital?