CASE 1: Issuance for Cash
A corporation is authorized to issue 200,000 ordinary shares with par value of P50 and 50,000
preference shares with par value of P100. During the current month, it has the following equity
transactions
a. Issued 10,000 ordinary shares by receiving a total of P720,000
Account Title Debit Credit
Cash 720,000
Ordinary Share Capital 500,000
Share Premium – Ordinary 220,000
b. Issued 25,000 preference shares for P125/share
Account Title Debit Credit
Cash 3,125,000
Preference Share Capital 2,500,000
Share Premium - Preference 625,000
CASE 2: Issuance for Non-cash Asset
During a year, a corporation issued 30,000 of its P100 par value ordinary shares (the corporation
does not have any other type of shares) in exchange for land. Required: Under each of the
following independent scenarios, determine the journal entry to record the issuance.
a. The land has a fair value of P4,200,000 while the shares have a fair value of P150/share
Account Title Debit Credit
Land 4,200,000
Ordinary Share Capital 3,000,000
Share Premium Capital 1,200,000
b. The land has fair value of P4,200,000 while the fair value of shares cannot be reliably
estimated
Account Title Debit Credit
Land 4,200,000
Ordinary Share Capital 3,000,000
Share Premium - Ordinary 1,200,000
c. The land’s fair value cannot be reliably estimates while the shares have fair value of
P150/share
Account Title Debit Credit
Land 4,500,000
Ordinary Share Capital 3,000,000
Share Premium – Ordinary 1,500,000
d. Both lands and shares’ fair values cannot reliably estimated
Account Title Debit Credit
Land 3,000,000
Ordinary Share Capital 3,000,000
CASE 3: Lump-sum purchase of shares
During a year, a corporate entity issued 120,000 of its P25 par value ordinary shares and 25,000
of its P100 par value preference shares at a basket price of P9,000,000
Under each of the following independent scenarios, determine the journal entry to record the
issuance of shares
1. The ordinary shares have P50 fair value per share while the preference shares have P160
fair value per share
Account Title Debit Credit
2. The ordinary shares have P50 fair value per share while the fair value of the preference
shares cannot be determined reliably.
Account Title Debit Credit
CASE 4: Treasury shares/Retirement of shares
At the beginning of the current year, an entity reported the following information
Share capital, P20 par, 400,000 shares issued P 8,000,000
Share premium – issuance 1,200,000
Share premium – treasury 40,000
Retained Earnings 5,000,000
Treasury shares, 20,000 shares, P28 cost 560,000
Under each of the following independent scenarios, determine the journal entries to record the
transaction
1. All of the treasury shares were sold for P32/share
Account Title Debit Credit
Cash 640,000
Treasury Shares 560,000
Share Premium – Treasury Shares 80,000
Retained Earnings – appropriated 560,000
Retained Earnings – unappropriated 560.000
2. Half of the treasury shares were sold for P32/share
Account Title Debit Credit
Cash 320,000
Treasury Shares 280,000
Share Premium – Treasury Shares 40,000
Retained Earnings – unappropriated 280,000
Retained Earnings – appropriated 280,000
3. All of the treasury shares were sold for P27/share
Account Title Debit Credit
Cash 540,000
Share Premium – Treasury Shares 20,000
Treasury Shares 560,000
Retained Earnings – unappropriated 560,000
Retained Earnings – appropriated 560,000
4. Half of the treasury shares were sold for P27/share
Account Title Debit Credit
5. All of the treasury shares were sold for P24/share
Account Title Debit Credit
6. Half of the treasury shares were sold for P24/share
Account Title Debit Credit
7. All the treasury shares were retired
Account Title Debit Credit
