Yvonne Antonette P.

Duyao ACT1122 - SEC 9

Module 2: Assignment

PROBLEM 9 – Treasury Shares

Cost method

Aug 10 Treasury Share 1,072,000

Cash 1,072,000

Nov 21 Cash 1,160,000

Treasury Share 1,072,000
Share premium - TS 88,000

Solution: 8,000 shares x 134 = 1,072,000 – purchased of treasury stock

8,000 shares x 145 = 1,160,000 – reselling of treasury stock

PROBLEM 10 – Treasury shares

Cost method

a. Cash 1,200,0000
Ordinary Shares 1,000,000
SP – OS 200,000

Solution: 10,000 shares x 120 per share = 1,200,000

b. Treasury Share 450,000

Cash 450,000

Solution: 3,000 share x 150 = 450,000

c. Cash 170,000
Treasury Share 150,000
SP-TS 20,000

Solution: 1,000 shares x 170 = 170,000

1,000 x 150 = 150,000

d. Cash 200,000
SP-TS 20,000
RE 80,000
Treasury Share 300,000
 Solution: 2,000 x 100 = 200,000
3,000 – 1,000 = 2,000 treasury share
2,000 x 150 = 300,000

PROBLEM 11 – Treasury Share Presentation

Shareholders’ Equity

Ordinary shares 6,000,000

Share Premium 60,000
Retained Earnings 2,000,000
Treasury Shares (700,000)
7,360,000

Solution: 60,000 OS x 100 = 6,000,000

5,000 TS x 140 = 700,000

PROBLEM 12 – Donated Capital

1. Journal entry
a. Receipt of the donated shares

Company received a 10,000 ordinary shares with a par value of 100 from the
shareholders. (Statement entry only)

b. Subsequent sale of the donated shares

Cash 1,300,000
SP- Donated Capital 1,300,000

Solution: 10,000 x 130 = 1,300,000

2. How would the donated capital be accounted for in the shareholder’s equity of
Pashmina?

Shareholders’ Equity

CONTRIBUTED CAPITAL (including Legal Capital)

Ordinary shares
Share Premium
 Retained earnings
Treasury Shares
Donated Capital

PROBLEM 14 – Retirement of Treasury Shares

Journalize transactions
a.) The shares were subsequently retired

Ordinary shares 300,000

Treasury Shares 250,000
SP-TS retirement 50,000

Solution: 30,000 shares x 10 par value = 300,000

b.) West corporation subsequently decided to retire all its treasury shares

Ordinary shares 200,000

SP-OS 40,000
SP- TS 80,000
RE 30,000
Treasury Share 350,000

Solution:
Os = 20,000 (amount to be retired) x 10 = 200,000

2,000 (OS) + 400,000 (SP) = 2,400,000 / 200,000 (total shared issued)

= 12 – 10 = 2 x 20,000 (SP-OS)
Module 3 – Additional Assignment (The data is in the Excel)
Date Particulars Debit Credit
1 5% Preference share capital A/c   Dr (1000 * 50) 50,000.00
Preference share Premium A/c Dr (1000 * 28) 28,000.00
Preference Share holders (1000 * 78) 78,000.00

Preference Share Holders A/c DR 78,000.00

Cash 78,000.00
to record 1,000 preference shares that were retired at P 78 per share

2 5% Preference share capital A/c Dr (800 * 50) 40,000.00

Preference share Premium A/c Dr (800* 12) 9,600.00
Preference Share holders (800 * 62) 49,600.00

Preference Share Holders A/c DR 49,600.00

Cash 49,600.00
to record 800 preference shares that were retired at P 62 per share

3 5% Preference share capital A/c Dr (2000 * 50) 100,000.00

Preference share Premium A/c Dr (160,000-100,000) 60,000.00
Preference Share holders (2000*4 *20) 160,000.00

Preference Share Holders A/c DR 160,000.00

Equity Capital 160,000.00
to record 2,000 preference shares that were converted into ordinary shares
with a ratio of 1 PS into 4 shares

4 5% Preference share capital A/c Dr (1500 * 50) 75,000.00

Preference share Premium A/c Dr (180,000-75,000) 105,000.00
Preference Share holders (1500*6*20) 180,000.00

Preference Share Holders A/c DR 180,000.00

Equity Capital 180,000.00
to record 1,500 preference shares that were converted into ordinary shares
with a ratio of 1 PS into 6 shares

5 Equity Share Capital (2000*20) 40,000.00

Ordinary share premium (2000* 3) 6,000.00
Equity Share holders (2000*23) 46,000.00

Equity Share Holders A/c DR 46,000.00

Cash 46,000.00
to record reacquired 2,000 ordinary shares at P 23 per share

6 Cash (2000 * $21) 42,000.00

Equity Share Capital (2000 * $20) 40,000.00
Ordinary share premium (2000 * $2) 2,000.00
to record all reissued treasury shares at P 21 per share
 Shareholders’ Equity Amount "P"
735,000.
5% Preference Share capital 00
2,340,000.
Ordinary Share Capital 00
97,400.
Preference Share Premium  00
396,000.
Ordinary Share Premium 00
1,250,000.
Retained Earnings 00

Problem 2

Date Particulars Debit Credit

September 2 Treasury Stock 110,000.00
Cash 110,000.00
To record acquisition of 5000 shares at 22 per share

October 27 Cash
Treasury Stock 75,000.00
Additional Paid In Capital in excess of par 66,000.00
To record re-issue of 3000 treasury shares at 25 per share 9,000.00

October 27 Cash
Additional Paid In Capital in excess of par 36,000.00
Cash 8,000.00
To record re-issue of 2000 treasury shares at 18 per share 44,000.00

Problem 3

Date Particulars Debit Credit

August 4 Equity share capital a/c 1,000,000.00
To Equity share capital a/c 1,000,000.00
to record 40,000 shares that has been split into 200,000 shares

August 4 Equity share capital a/c 1,000,000.00

To Equity share capital a/c 1,000,000.00
to record 40000 shares has been converted into 20000 shares being Reverse
split

August 4 Share capital a/c (old) 1,000,000.00

To share capital a/c (new) 600,000.00
To Capital Reduction a/c 400,000.00
to record being change in share capital with change in par value
Problem 4

Date Particulars Debit Credit

March 03 15% preference share capital (600*150) 90,000.00
Preference share premium (workings) 18,000.00
Cash (600*165) 99,000.00
Retained earnings 9,000.00
to record preference shares retired

March 21 No entry required

(Par value =30/5=P 6)
Number of ordinary shares=(200000/30)*5=33333

June 14 Treasury shares (2000*8) 16,000.00

Cash 16,000.00
to record ordinary shares reacquired

August 05 15% preference share capital (1000*150) 150,000.00

Ordinary share capital (1000*4*) 24,000.00
Ordinary share premium 126,000.00
to record preference shares converted

November 19 Cash (1200*12) 14,400.00

Treasury shares (1200*8) 9,600.00
Treasury share premium 4,800.00
to record reissued treasury shares

December 28 Income Summary 16,000.00

Retained earnings 16,000.00
to record profit for the year

Workings:

Preference share premium related to shares retired=Number of shares retired*Preference share

premium per share

Preference share premium per share=Preference share premium/Number of preference shares

issued

Number of preference shares issued=Preference share capital/Par value=600000/150=4000

Preference share premium per share=120000/4000=P 30

Preference share premium related to shares retired=600*30=P 18000

2. Shareholder's equity

15% preference share capital,P 150 par =(600000-90000-150000) = 360000

Ordinary share capital,P 6 stated value= (200000+24000) = 224000

Preference share premium= (120000-18000) = 102000

Ordinary share premium= (150000+126000)= 276000

Treasury share premium = 4800

Retained earnings = (950000-9000+450000) = 1391000

Treasury shares= (16000-9600) =-6400

Total shareholder's equity = 2351400

3. Ordinary Shares

Beginning balance= 200000/30= 6667

Shares after stock split= 6667*5= 33335

Add:Preference shares converted = 1000*4= 4000

Ordinary shares issued = 37335

and,

shares reacquired= 2000

less: shares reissued= (1200)

ordinary shares in treasury shares = 800

now,

outstanding ordinary shares= Ordinary shares issued -ordinary shares in treasury shares

= 37335-800 = 36535
~ preference shares

beginning balance= 600000/150= 4000

less:

shares retired= (600)

shares converted= (1000)

preference shares issued and outstanding= 2400