This document contains journal entries for several accounting problems involving different methods of accounting for share capital transactions, treasury shares, dividends, prior period adjustments, and revaluations. The problems demonstrate the journal entries for issuing shares at par value and premium, accounting for treasury shares, adjusting accumulated profits for prior period errors and changes in estimates, and recording revaluations of non-current assets and fair value changes in investments.

1. Problem 8-16 Memorandum Method vs Journal Entry Method
CASE 1 – Par value is P100.
Memo Method
Journal Entry Method
a
.
Memo entry (in the ledger) Unissued ordinary
shares
5,000,00
0
Authorized ord.
shares
5,000,00
0
(50,000 x P100)
b
.
Subscriptions receivable 2,400,00
0
Subscriptions
receivable
2,400,00
0
Subscribed ord. shares 2,000,0
00
Subscribed ord.
shares
2,000,00
0
Share premium –
ordinary
(P20 x 20,000)
400,000 APIC (P20 x
20,000)
400,000
c
.
Cash 1,200,00
0
Cash 1,200,00
0
Subscriptions receivable 1,200,0
00
Subscriptions
receivable
1,200,00
0
Subscribed ord. shares 800,000 Subscribed ord. shares 800,000
Ordinary share capital
(2,000,000 x 40%)
800,000 Unissued ord. shares 800,000
d
.
Cash 1,200,00
0
Cash 1,200,00
0
Subscriptions receivable 1,200,0
00
Subscriptions
receivable
1,200,00
0
Subscribed ord. shares 1,200,00
0
Subscribed ord. shares 1,200,00
0
Ordinary share capital
(2,000,000 x 60%)
1,200,0
00
Unissued ord. shares 1,200,00
0
e
.
Cash 1,500,00
0
Cash 1,500,00
0
Ordinary share capital
(10,000 x P100)
1,000,0
00
Unissued ord. shares 1,000,00
0
APIC 500,000 Share premium –
ord.
500,000

2. f. Cash 50,000 Cash 50,000
Subscriptions receivable 280,000 Subscriptions
receivable
280,000
Subscribed ord. shares 300,000 Subscribed ord.
shares
300,000
Share premium –
ordinary
30,000 Share premium –
ord.
30,000
CASE 2 – Stated value is P50
Memo Method
Journal Entry Method
a
.
Memo entry (in the ledger) Unissued share capital 2,500,00
0
Authorized share
capital
2,500,00
0
(50,000 x P50)
b
.
Subscriptions receivable 2,400,00
0
Subscriptions
receivable
2,400,00
0
Subscribed share capital 1,000,0
00
Subscribed share
capital
1,000,00
0
Share premium (P70 x
20,000)
1,400,0
00
Share premium (P70 x
20,000)
1,400,00
0
c
.
Cash 1,200,00
0
Cash 1,200,00
0
Subscriptions receivable 1,200,0
00
Subscriptions
receivable
1,200,00
0
Subscribed share capital 400,000 Subscribed share
capital
400,000
Share capital (1,000,000
x 40%)
400,000 Unissued share
capital
400,000
d
.
Cash 1,200,00
0
Cash 1,200,00
0
Subscriptions receivable 1,200,0
00
Subscriptions
receivable
1,200,00
0
Subscribed share capital 600,000 Subscribed share
capital
600,000
Share capital (1,000,000
x 60%)
600,000 Unissued share
capital
600,000

3. e
.
Cash 1,500,00
0
Cash 1,500,00
0
Share capital (10,000 x
P50)
500,000 Unissued share
capital
500,000
Share premium 1,000,0
00
Share premium 1,000,00
0
f. Cash 50,000 Cash 50,000
Subscriptions receivable 280,000 Subscriptions
receivable
280,000
Subscribed share capital 150,000 Subscribed share
capital
150,000
Share premium 180,000 Share premium 180,000
CASE 3 – No par, no stated value
Memo Method
Journal Entry Method
a
.
Memo entry (in the ledger) Memo entry (in the
ledger)
b
.
Subscriptions receivable 2,400,00
0
Subscriptions
receivable
2,400,00
0
Subscribed share capital 2,400,0
00
Subscribed share
capital
2,400,00
0
c
.
Cash 1,200,00
0
Cash 1,200,00
0
Subscriptions receivable 1,200,0
00
Subscriptions
receivable
1,200,00
0
Subscribed share capital 480,000 Subscribed share
capital
480,000
Share capital 480,000 Unissued share
capital
480,000
(P1,200,000 x 40%)
d
.
Cash 1,200,00
0
Cash 1,200,00
0
Subscriptions receivable 1,200,0
00
Subscriptions
receivable
1,200,00
0
Subscribed share capital 1,920,00
0
Subscribed share
capital
1,920,00
0

4. Share capital 1,920,0
00
Unissued share
capital
1,920,00
0
e
.
Cash 1,500,00
0
Cash 1,500,00
0
Share capital 1,500,0
00
Unissued share
capital
1,500,00
0
f. Cash 50,000 Cash 50,000
Subscriptions receivable 280,000 Subscriptions
receivable
280,000
Subscribed share capital 330,000 Subscribed share
capital
330,000
Problem 8-20
Ordinary Shares and Preference Shares
Problem 8-20
1. Journal entries
1. a. Memo entry
2. a. Cash 600,000
Subscriptions receivable 120,000
Subscribed ordinary shares (6,000 x P100)
600,000
Share premium – OS
120,000
Subscribed ordinary shares (600,000 x 75%) 450,000
Ordinary share capital
450,000

5. b. Cash 260,000
Subscriptions receivable 40,000
Subscribed preference share (5,000 x P50)
250,000
APIC – preferred
50,000
Subscribed preference share (250,000 x 80%) 200,000
Preference share capital
200,000
3. Income summary 1,000,000
Accum. profits
1,000,000
4. a. Treasury share – ordinary (500 x P80) 40,000
Cash
40,000
b. Treasury share – preferred (1,000 x P60) 60,000
Cash
60,000
5. Cash 27,000
Treasury stock – ordinary (300 x P80)
24,000
Share premium – treasury stock - OS
3,000

6. 6. Preference share capital 40,000
Share premium – PS 4,000
Cash (800 x P55)
44,000
2. Amounts and number of shares issued and outstanding
Preference Ordinary
Number Amount Number Amount
Issued 4,000 P200,000 4,800 P480,000
Subscribed 1,000 50,000 1,500 150,000
Total 5,000 P250,000 6,300 P630,000
Treasury shares (1,000) ( 50,000) ( 500) ( 50,000)
Retired ( 800) ( 40,000) . .
Outstanding 3,200
P160,0
0
0
5,800 P580,000
1. Shareholders’ equity
Diamond Company
Shareholders’ Equity
December 31, 200x
Share capital:
10% Preference shares, at par P50 P160,000
Subscribed preference shares P 50,000
Less: Subscriptions receivable 40,000 10,000
Ordinary shares, at par P100 450,000
Subscribed ordinary shares P150,000
Less: Subscriptions receivable – OS 120,000 30,000 P650,000
Reserves:
Share premium – Preference (original issue) P 46,000
Share premium – Ordinary (original issue) 120,000
Share premium – Treasury shares 3,000
Appropriation reserve – treasury shares (preferred) 60,000
Appropriation reserve – treasury shares (ordinary) 16,000 245,000
Accum. profits – unappropriated 924,000
Total P1,819,000
Less: Treasury shares – PS P 60,000
Treasury shares – OS 16,000 76,000

7. Total shareholders’ equity
P1,743,0
00
Problem 8-22 - Legal Capital
Problem 8-22
1. Journal entries
a. Authorization - memo
b. Cash 1,500,000
Subscriptions receivable 4,500,000
Subscribed share capital 6,000,000
Cash 6,000,000
Share capital 6,000,000
2. Share capital issued P 6,000,000
Add: Subscribed share capital at par 6,000,000
Total amount of legal capital P12,000,000
Problem 9-8 Treasury Shares, Re-issuance
1. Journal entries
a. Cash 144,000
Ordinary shares 120,000
Share premium – OS 24,000
b. Treasury shares 120,000
Cash 120,000
Accum. profits 120,000
Appropriation reserve – TS 120,000
c. Accum. profits 500,000
Dividends payable 500,000
d. Cash 62,500
Treasury shares 60,000
Share premium – TS 2,500
Appropriation reserve – TS 60,000
Accum. profits 60,000
e. Accum. profits 100,000
Appropriation reserve – gen. contingencies 100,000
f. Unrealized holding loss 20,000
Marketable securities – Noncurrent 20,000
g. Income summary 50,000
Accum. profits 50,000

8. 2. Shareholders’ equity (summary)
Share capital:
6% Preference shares P 125,000
Ordinary shares 1,120,000 P1,245,000
Other reserves:
Share premium – 6% preference shares P 12,500
Share premium – ordinary shares 174,000
Share premium – treasury shares 2,500
Appropriation reserve – treasury shares 60,000
Appropriation reserve – gen. contingencies 100,000
Unrealized holding loss (20,000) 329,000
Accum. profits 136,000
Total P1,710,000
Less: Treasury shares 60,000
Total shareholders’ equity P1,650,000
Problem 10-13 Prior Period Adjustments
1. Journal entry
a) No entry – counter balancing error
b) Prepaid expense 40,000
Accum. Profits 40,000
c) Accum. Profits 30,000
Accum. Deprecition – office equipment 30,000
d) Income summary 500,000
Accum. profits 500,000
2. Adjusted Balance of Accumulated Profits
Unadjusted balance – Accum. profits P 660,000
Add (deduct) adjustments:
b) 40,000
c) (30,000)
d) 500,000
Adjusted balance – Accum. profits P1,170,000
Problem 10-14 Change in Accounting Estimate
1. No net effect on the accumulated profits because accounting estimate is accounted currently and
prospectively.
2. a. Depreciation expense 120,000
Accumulated depreciation 120,000
b. Warranty payable 10,000
Warranty expense 40,000
Cash 50,000
Problem 10-16 Accounting Errors

9. Problem 10-16
1. Accum. Profits 100,000
Accounts receivable 50,000
Accounts payable 9,000
Income summary 159,000
Problem 10-21 - Revaluation Reserve
B. Revaluation 1 Revaluation 2 Difference
Equipment 1,000,000 1,333,333 333,333
Accum. Depreciation (7 years) 700,000 933,333 233,333
300,000 400,000 100,000
Condition percent (3/10) 30% 30%
Journal entry
Equipment 333,333
Accum. Depreciation 233,333
Revaluation surplus 100,000
Problem 10-23 Fair Value Differences
1. Trading securities 700,000
Cash 700,000
Unrealized holding loss (to profit & loss) 20,000
Trading securities 20,000
2. AFS 700,000
Cash 700,000
Unrealized holding loss (to equity) 20,000
AFS 20,000
3. AFS 700,000
Cash 700,000
Impairment loss 20,000
AFS 20,000
Problem 11-10 Journal Entries (Dates related to Dividend
A. Journal entry:
1. Declaration date:
Accum. profits (10,000 x 20% x P100) 200,000
Share dividend distributable 200,000
2. Issuance date:
Share dividend distributable 200,000
Ordinary share capital 200,000
B. Journal entry:
1. Declaration date:
Accum. profits (10,000/2 x P100) 500,000
A. Historical Appraised value Difference
Equipment 500,000 1,000,000 500,000
Accum. depreciation 150,000 300,000 150,000
350,000 700,000 350,000
1. Book value (500,000 – 150,000) P350,000
2. Condition percent (700,000/1,000,000) 70%
3. Appraised value (700,000/70%) 1,000,000
4. Revaluation surplus (700,000 – 350,000) 350,000

10. Share dividend distributable 500,000
2. Issuance date:
Share dividend distributable 500,000
Ordinary share capital 500,000
Problem 11-15
Shareholders of records:
Shares issued 25,000
Treasury shares (3,000)
Outstanding shares 22,000
Case 1:
1. January 15, 200C
Accum. profits 220,000
Cash dividend payable (22,000 x P10) 220,000
2. January 31, 200C
Cash dividend payable 220,000
Cash 220,000
Cash 2:
1. January 15, 200C
Accum. profits (3,000,000 x 20%) 600,000
Cash dividend payable 600,000
2. January 31, 200C
Cash dividend payable 600,000
Cash 600,000
Case 3:
1. January 15, 200C
Accum. profits 264,000
Cash dividend payable (22,000 x P50 x 10%) 110,000
Share dividend distributable (22,000 x P50 x 10%) 110,000
APIC (22,000 x P20 x 10%) 44,000
2. January 31, 200C
Cash dividend payable (22,000 x P50 x 10%) 110,000
Share dividend distributable (22,000 x P50 x 10%) 110,000
Cash 110,000
Ordinary share capital 110,000
Case 4:
1. January 15, 200C
Accum. profits (P300,000 x 50%) 150,000
Property dividend payable 150,000
2. January 30, 200C
Property dividend payable 150,000
Investment in securities – M. Co. 150,000
Note: The value used for the declaration and payment of
dividend is at cost because the dividend declared is just
part of the total investment in securities (portfolio investment).
Case 5:
1. January 15, 200C
Accum. profits 3,000,000

11. Capital liquidated 400,000
Cash dividend payable 3,400,000
2. January 30, 200C
Cash dividend payable 3,400,000
Cash 3,400,000
Case 6:
1. January 15, 200C
Accum. profits (P22,000 x P70 x 10%)) 154,000
Share dividend distributable (22,000 x P50 x 10%) 110,000
Share premium 44,000
2. January 30, 200C
Share dividend distributable 110,000
Ordinary share capital 110,000
Case 7:
1. January 15, 200C
Accum. profits (P22,000 x P50 x 20%)) 220,000
Share dividend payable (22,000 x P50 x 10%) 220,000
2. January 30, 200C
Share dividend payable 220,000
Ordinary share capital 220,000
Proble 12-9 Basic Earnings and Book Value per Share
Problem 12-9
1. Income after tax
P
50
0,0
00
Divided by average outstanding ordinary shares
85,
00
0
Basic earnings per share
P
5.8
8
2. Total shareholders’ equity
P1,950,0
00

12. Add: Subscriptions receivable
50,
00
0
Total
P2,000,0
00
Divided by outstanding ordinary shares
80,
00
0
Book value per share
P
25.
00
Supporting computations:
a. Average outstanding ordinary shares
Jan. 1: (80,000 x 6) 480,000
July 1: (100,000 x 3) 300,000
Oct. 1: (80,000 x 3) 240,000
Total 1,020,000
Divided by number of months in a year 12
Average outstanding ordinary shares 85,000
b. Outstanding ordinary shares
Jan. 1: Issuance 80,000
July 1: Subscribed 20,000

13. Oct. 1: Treasury (20,000)
Outstanding ordinary shares 80,000