1.

ISSUANCE

2. SUBSCRIPTION
Subscription is where the shares are being reserved for the buyer of shares where he/she will be treated
as a subscriber and will become a shareholder when the subscription price is fully paid.
Dr. Cash xx
Dr. Subscription Receivable xx
Cr. Subscribed share capital xx

3. TREASURY SHARES
A share can becomes a treasury share when the company bought back the shares that has been issued to a
shareholder to facilitate the withdrawing of a certain shareholder and then reissued them at a later date.
Treasury shares is also always measured at cost.
So, when we reacquire treasury share, we debit treasury share and credit cash, because when we are
issuing share we credit equity account therefore if we buy it back we will bebit it.
REACQUISITION OF TREASURY SHARES: JOURNAL ENTRY
Dr. Treasury shares (@cost) xx
Cr. Cash xx
Dr. RE-unappropriated xx
4. SHARE Cr. RE-appropriated xx SPLIT
Share split happens when all of the company’s authorized share capital are nearing it’s limit and the
company wants to increased the number of shares since it is troublesome to file for additional authorized
share capital in thesec as there are a lot of paperworks to do. There are two share two share split that
could happen, either split-up or split-down. In split-up the number of shares doubles and the value of
shares are divided by two. Wherein split-down, the number of shares divided by two but the value of
shares doubles.
To journalize a share split we do a MEMO ENTRY.

5. DIVIDENDS
Dividends are declared if the company has retained earnings-unappropriated, it is the income that the
shareholder’s gets in lieu of their shares. It is given to the shareholders both ordinary and preference
shareholders, subscribers has a portion in the dividends as well but the company hold it until the
subsription price are fully paid.
When the dividends declared are small (<20%) it will be calculated @fmv, and if it is large (20% or up)
it will be calculated @par.

At the date of declaration, the pro-forma entry when At the date of declaration, the pro-forma
the dividends is small. entry when the dividends is big.

Dr. Re (@fmv) Xx Dr. Re (@par) Xx

cr. Sdd (@par) xx cr. Sdd (@par) xx
cr.os-sp xx

6. PREFERENCE SHARE DIVIDENDS

PREFERENCE SHARE DIVIDENDS
 7. EARNINGS PER SHARE AND BOOK VALUE PER SHARE
Book value per share is the amount in which the shareholder will get if the corporation is liquidated.
Earnings per share and book value per share is the amount where a shareholder can compute to check if
his/her investment grows and by how much.

COMPREHENSIVE PROBLEM
The ff. transactions relate to the stockholders’ equity transactions of ANYCOLOR for its first year of
existence.
Jan 7 Articles of incorporation are filed with the Philippine SEC. SEC authorized the issuance of
10,000 shares of P50 par value preference share and 200,000 shares of P10 par value ordinary share.
Jan 28 40,000 shares of ordinary share are issued for P14 per share.
Feb 3 10,000 shares of ordinary share are subscribed for P20.
Feb 24 Declared 20% share dividends to OS
Sep 12 Received subscriptions for 10,000 shares of preference share at P53 per share. A 40% down
payment accompanied the subscriptions.
Oct 1 Reacquired 5,000 ordinary shares for a total cost of 80,000.
Nov 5 Reissued 3,000 ordinary shares at P18 per share.
Dec 10 Share split-up all share capital into 2.
Dec 31 Profit and loss summary to be closed to retained earnings amounted to P300,000 (credit).

JOURNAL ENTRIES
Jan 7 The company was authorized to issue 10,000 preferred stock, P50 par value and 200,000
ordinary share, P10 par value.
Jan 28 Dr. Cash (40,000 x P14) 560,000
Cr. OS 40,000 x P10) 400,000
SP-OS 160,000
Feb 3 Subscription receivable 200,000
Ordinary share subscribed 100,000
SP-OS 100,000
Feb 24 RE 100,000
SDD-OS 100,000
Sep 12 Cash 212,000
Subscription Receivable 318,000
Subscribed PS (10,000 x P50) 500,000
SP-PS 30,000
Oct 1 Treasury Share (5,000 x P16) 80,000
 Cash 80,000
Nov 5 Cash (3,000 x P18) 54,000
Treasury Share (3,000 x P16) 48,000
SP-TS 6,000
# VALUE # VALUE
OS 40,000 1O 80,000 5
Subscribed OS 10,000 10 20,000 5
Subscribed PS 10,000 50 20,000 25
TS 5,000 16 10,000 8
SDD 10,000 10 20,000 5
Dec 10

Dec 31 I/S 300,000

Retained Earnings 300,000

OS - 400,000 + 100,000+100,000 – 200,000= 400,000 SHE – 1,464,000

PS - 500,000
SP- 160,000+100,000+30,000+6,000= 296,000
TS - 80,000 - 48,000 = 32,000
RE -unapp. – 300,000