Data for Shareholders Equity
Ordinary Shares, P20 par, 30,000 shares authorized
20, 000 shares issued
Preference Shares, P10 par, 50,000 shares authorized
10,000 shares issued
Subscription Receivable-Ordinary Shares
Subscribed Ordinary Shares
Subscription Receivable- Preference Shares
Subscribed Preference Shares
Retained Earnings
Share Premium- Ordinary Shares
Share Premium - Preference Shares
Share Premium - Treasury Shares -Ordinary Shares
Treasury Shares -Ordinary Shares 800 shares at cost P37.50
Treasury Shares - Preference Shares 500 shares at cost P40
Transactions
1. ABC Corporation was authorized by SEC to issue 100,000 ordinary shares at P20 par Value
memoradum entry
"authorized to issue 100,000 shares"
Case 1
2. 1000 shares were subscribed at par
Subscription Receivable (1000 x P20) 20,000
Subscribed Ordinary Shares
3. 25% of the subscribed shares were paid
Cash ( 20,000 x 25%) 5,000
Subscription Receivable
4. Unpaid balance of the subscribed shares were paid and a share certificate is issued
Cash (20,000 * 75%) 15,000
Subscription Receivable
5. 1500 shares were issued in cash at P25
Cash (1500 x P25)
Ordinary Shares (1500 x 20)
Share Premium - OS (1500 x 5)
6. 500 shares were issued in exchange of Land with a fair market value of P200,000. The share has a fair market value o
Case 1 - FMV Received
Land
Ordinary Shares (500 x P20)
Share Premium - OS (P200,000 -10,000)
Note: Order of Priority
a. Fair market value of the property Received
b. Fair Market Value of shares Given
c. Par Value of the shares Given
7. 1000 shares were issued for payment of Legal expenses worth P50,000
Case 1
Legal Expenses P50,000
Ordinary Shares ( 1000 X P20)
Share Premium -OS
8. 900 shares were issued for payment of Accounts Payable to suppliers worth P25,000
Accounts Payable P25,000
Ordinary Shares (900 x P20)
Share Premium -OS
1. 100 shares of ordinary shares are held in treasury at P37.50
Treasury Shares P3750
Cash P3750
2. 100 Ordinary Shares held in Treasury are later reissued at P38
Cash (100 shares x P38.00) P3800
Treasury Shares
Share Premium-TS
3. 100 ordinary shares held in treasury are retired.
Ordinary Shares (100x20)
Share Premium-OS
Share Premium -TS
Retained Earnings
Treasury Shares (100 xP37.50)
***Supposed the cost of treasury is P15.
Ordinary Shares (100 x P20)
Treasury Shares (100 x P15)
Share Premium- TS
3. Shares are split.
Given: Issued ordinary shares 30,000 at P40 par value.
Share Split Effect
a. Share split up 1 to 10 number of shares increases, par value decrea
b. Share split down 10 to 1 number of shares decreases, par value increa
Cash Dividend
4. The Corporation's Board of Directors with the concurrence of the majority stockholders decided to distribute dividend
The following dates transpired for dividend distribution.
a. March 1, 2023 the corporation declares cash dividend to outstanding Ordinary Shareholders at P15 pe
b. On April, 2, the Corporation records the shareholders who will receive cash dividend distribution.
c. On May 3 the corporation pays the cash dividend to shareholders.
Declaration a. Retained Earnings (117,000 x P15) 1,755,000.00
Cash dividend payable
Record b. Date of Record
Payment c. Cash Dividend Payable 1,755,000.00
Cash 1,755,000.00
5. The Corporation distributed stocks as dividend to outstanding shares.
a. 20% share dividend is distributed to ordinary shareholders.
b. 10% share dividend is distributed to ordinary shareholdes.
***FMV per share at the date of declaration
a. Large Stock
23,400.00
468,000.00
Date of Declaration Retained Earnings
Stock Dividend Payable
Date of Record No Entry
Date of Payment Stock Dividend Payable
Ordinary Shares
6. The Corporation distributed Machinery as dividend to ordinary shareholders.
The following costs relates to Machinery at the time the property dividend is declared.
Cost P200,000
Case 1
Date of Declaration Retained Earnings
Property dividend Payable
Date of Record No entry
Date of Payment Property Dividend Payable
Machinery
Gain on distribution of Property Dividend
Subscription Receivable
20,000
5,000
15,000
37,500
30,000
7500
share has a fair market value of P30 per share.
P200,000
P10,000
P190,000
R
G
G
P20,000
P30,000
P18,000
P7,000
(100 shares x P37.50)
**Order of Priority
1. Share Premium of Treasury Shares
2. Retained Earnings
P3750
P50
P2000 ***Order of Priority
P400 1. Share premium from original issuance
P1000 2. Share Premium from Treasury Share
P350 3. Retained Earnings
3750
P2000
P1500
P500
ares increases, par value decreases
ares decreases, par value increases
s decided to distribute dividends to shareholders.
Ordinary Shareholders at P15 per share.
e cash dividend distribution.
1,755,000.00
Large
Small
hare at the date of declaration P30.00.
Stock b. Small Stock
468,000 Declaration
468,000
Record
468,000 Payment
468,000
Case 1 (200,000)
erty dividend is declared. December 20, 2020 December 25, 2020 January 2, 2021
Declaration Record Payment
FMV P550,000 -
550,000 Declaration Retained Earnings
dend Payable 550,000
Record No Entry
550,000 Payment Retained Earnings
200,000
bution of Property Dividend 350,000
Property Dividend Payable
400,000
100,000
20,000
30,000
50,000
10,000
190,000
80,000
20,000
15,000
30,000
20,000
Case 2
n Receivable (1000 x P30) 30,000
Subscribed Ordinary Shares (1000 x P20)
Share Premium - OS
Case 2. FMV of shares
Land
Ordinary Shares
Share Premium-OS
Case 2 - Legal Expense worth P15,000
Legal Expenses P15,000
Discount on Ordinary Shares P5,000
Ordinary Shares (1000 x P20)
6,000
0.12
Treasury Shares share previously issued but subsequently reacqui
emium of Treasury Shares
emium from original issuance 100 0.005
emium from Treasury Share
Answer
Ordinary shares, 300,000 (10 x 30,000); Par value P4.00 (P40 /10)
Ordinary shares 3000 (30,000/10); Par value P400 (40 x 10)
Date declaration January 1, 2021
Date of Record No Entry
Issued Shares 100,000 Date of Payment January 30, 2021
Subscribed Shares 10,000
Stock dividend 10,000
Treasury Shares -2,000
Donated Shares -1,000
Outstanding shares 117,000
(Valuation is at par value if no par value, use stated value)
(Valuation is at fair market value at the date of declaration)
b. Small Stock
11,700.00
Case 1
Retained Earnings (11700 X 30) 351,000.00
Stock Dividend Payable (11700 x 20) 234,000.00
Share Premium -Ordinary Share 117,000.00
No Entry
Stock Dividend Payable 234,000
Ordinary Shares 234,000
Case 2 (P200,000)
December 20, 2020 December 25, 2020 January 2, 2021
Declaration Record Payment
P550,000 - P650000
Case 2
550,000
Property Dividend Payable 550,000
100,000
Property Dividend Payable 100,000
ividend Payable 650,000
Machinery 200,000
Gain on Distribution of Property Dividend 450,000
If subscribed below par, P10.00
Subscription Receivable
20,000 ** Discount on Ordinary Share
10,000
(500 x 30) P15,000
inary Shares (500 x 20)
re Premium-OS
P20,000
50,000
75000 6000
6000
12.5
ued but subsequently reacquired.
Ordinary Shares
Issued 20,000
Reacquisition
400 Retirement -100
New Issued Share 19,900
uary 1, 2021 Retained Earnings
Dividends Payable
uary 30, 2021 Dividends Payable
Cash/ Share Cpital/Property
Issued Shares 100,000
Subscribed Shares 10,000
Stock dividend 10,000
Treasury Shares 2,000
Donated Shares 1,000
Case 2: FV of Share is P15.
Retained Earnings (11700x 15)
Discount on Ordinary Share (11700 x 5)
Stock Dividend Payable (11700 x 20)
No Entry
Stock Dividend Payable 234,000
Ordinary Shares
Case 3. Given (Cost of Machinery 200,000)
December 20, 2020 December 20, 2021
Declaration Record
P550,000 600,000
Date of Declaration Retained Earnings
Property Dividend Payable
Date of Record No Entry Retained Earnings
Date of Payment Retained Earning
Property Dividend Payable
Property Dividend Payable
Machinery
Gain on Distribution of Property Dividend
Case 3
elow par, P10.00
(1000 x 10) 10,000
dinary Share (1000 x 10) 10,000
Subscribed Ordinary Shares (1000 x 20) 20,000
Case 3 - Par Value of Share Given
Land (500 x P20)
P10,000 Ordinary Shares
P5000
Share Premium
xx
xx
xx
tal/Property xx
175,500.00
58,500.00
234,000.00
234,000
Case 4. Given (Cost of Machinery P200,000)
January 2, 2021 December 20, 2020
Payment Declaration
650,000 P550,000
550,000 Declaration Retained Earnings
nd Payable 550,000 Property Dividend Payable
50,000 Record No Entry Property Dividend Payable
Property Dividend Payable 50,000
50,000 Payment Property Dividend Payable
nd Payable 50,000 Retained Earnings
650,000 Property Dividend Payable
200,000 Machinery
ution of Property Dividend 450,000 Gain on Distribution of Property Divid
P10,000
P10,000
Depreciated Value = Cost - Accumulated Depreciation
Cost is different Book Value or Depreciable Value or Depreciated Value
Machinery P200,000)
December 20, 2021 January 2, 2021
Record Payment
400,000 350,000
550,000
dend Payable 550,000 Date of Declaration
dend Payable 150,000
Retained Earnings 150,000 Date of Record
50,000
50,000
350,000
200,000
ibution of Property Dividend 150,000 Date of Payment
Case 5. Given Cost of the Machinery P400,000
December 20, 2020 December 20, 2021 January 2, 2021
Declaration Record Payment
P550,000 350,000 300,000
Retained Earnings 550,000
Property Dividend Payable 550,000
No Entry Property Dividend Payable 200,000
Retained Earnings 200,000
Impairment Loss 50,000
Machinery 50,000
Property Dividend Payable 50,000
Retained Earnings 50,000
Property Dividend Payable 300,000
Loss on Distribution ofP 50,000
Machinery 350,000
400,000 Cost
350,000 FMV
-50,000 Impairment Loss
(Decrease of FMV compared to Cost)
ONE WAY VARIANCE ANALYSIS
Actual
Fixed 75,000
6000
0 12.5
Variable 36,000
6,000
6 111,000
Standard
Variable 50,000 0.1 5 25000
Fixed 50,000 0.1 20 100000
125000
VARIANCE (FAVORABLE) -14,000
TWO WAY ANALYSIS
Volume Variance (Fixed Overhead Cost) (Actual - Budget Volume) x Standard Hour x Standard Fixed rate
(50,000 - 40,000) x .10 hr x P20/hr
10,000 x .10hr x P20/hr
P20,000 Unfavorable
Controllable Variance Total Variance - Volume Variance
14,000 F - 20,000 UF = 6,000 Unfavorable
Fixed Overhead Cost (Budgeted) 80,000
Number of Hours (Budgeted) 4000
Fixed Overhead Cost (Budgedted) 20
