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Problem 1

Karina Company was organized to issue 40,000 shares of P100 par value ordinary shares. During the year 200A, the company issued shares at par value and for a premium, and recorded subscription receivables. Journal entries were prepared using both the memorandum method and the journal entry method to reflect these transactions.

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19 views2 pages

Problem 1

Karina Company was organized to issue 40,000 shares of P100 par value ordinary shares. During the year 200A, the company issued shares at par value and for a premium, and recorded subscription receivables. Journal entries were prepared using both the memorandum method and the journal entry method to reflect these transactions.

Uploaded by

agonoyhannamarjorie
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Problem 1

On January 1, 200A, Karina Company was


organized and authorized to issue 40,000
shares of P100 par value
ordinary shares. The following are the
transactions relating to shareholders during
the year 200A:

Jan. 1: Issued 10,000 shares to the original


incorporators at par value.

MEMO METHOD
Debit:
Credit:

Feb. 2: Issued 15,000 shares for P120 per


share.

Dec. 9: Received P150,000 cash as full


payment from subscriptions of 1,200 shares.

Required:
1. 2. Prepare journal entries to record the
transactions using the memorandum method.
Prepare journal entries to record the
transactions using the journal entry method.

MEMO METHOD
01/01. Authorized to issue 40,000 shares with
₱100 par value

01/01 Cash. 1,000,000


Ordinary Share Capital.
1,000,000

02/02. Cash 1,800,000


Ordinary Share Capital.
1,500,000
Share Premium
300,000

03/03. Subscription Receivable. 150,000


Subscribe Ordinary Share
Capital. 120,000
Share Premium.
30,000

12/09. Cash. 150,000


Subscription Receivable.
150,000
Subscribe Ordinary Share Capital
120,000
Ordinary Share Capital.
120,000

JOURNAL ENTRY METHOD


01/01 Unissued Share Capital 4,000,000

Authorized Ordinary Share Capital


4,000,000
01/01. Cash. 1,000,000
Unissued Ordinary Share Capital
1,000,000

02/02. Cash. 1,000,000


Ordinary Share Capital. 1,500,000
Share Premium 300,000

03/03. Subscription Receivable. 150,000


Subscribe Ordinary Share
Capital. 120,000
Share Premium.
30,000
12/09. Subscribe Ordinary Share Capital.
120,000
Unissued Ordinary Share Capital.
120,000

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