The document discusses accounting for share capital transactions under different scenarios of shares having par value, stated value, or no par/stated value. It provides examples of journal entries for the issuance of shares for cash, property, and services on different dates. For shares with par value of P50, the entries debit cash and property and credit shares at par value with premium/discount accounted for. For stated value of P40, entries are similar but with stated value amount. For no par/stated value shares, entries simply debit cash/property for proceeds and credit shares issued.
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Accounting For No Par Value Shares
The document discusses accounting for share capital transactions under different scenarios of shares having par value, stated value, or no par/stated value. It provides examples of journal entries for the issuance of shares for cash, property, and services on different dates. For shares with par value of P50, the entries debit cash and property and credit shares at par value with premium/discount accounted for. For stated value of P40, entries are similar but with stated value amount. For no par/stated value shares, entries simply debit cash/property for proceeds and credit shares issued.
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Chapter 6
Accounting for Share Capital
Transactions
Mrs. Lucia A. Suello, CPA, MBA
ACCOUNTING FOR NO PAR VALUE SHARES ISSUED FOR CASH SEATWORK Oct 2 Issued 10,000 shares for P60 per share. 8 Issued 7,500 shares for P50 per share. 21 Issued 2,500 shares for land. The fair market value of the land was P112,000, while the shares are currently trading at P55 per share 26 Issued 1,000 shares to lawyers in payment of their bill amounting to P60,000 pertaining to services rendered during incorporation. Journalize the above transactions under the foll0wing assumptions: Case 1 The ordinary share has a P50 par value. Case 2 The ordinary share has a P40 stated value. Case 3 The ordinary share has no-par or stated value. CASE 1 WITH P50 PAR VALUE Oct. 2 Cash (10,000 x P60) 600,000 Ordinary Shares (10,000 x P50) 500,000 Share premium 100,000
Oct. 8 Cash (7,500 x P50) 375,000
Ordinary Shares (7,500 x P50) 375,000
Oct. 21 Land 112,000
Discount on Share Capital 13,000 Ordinary Shares (2,500 x P50) 125,000
Oct. 26 Organization Expense 60,000
Ordinary Shares (1,000 x P50) 50,000 Share premium 10,000 CASE 2 WITH P40 STATED VALUE Oct. 2 Cash (10,000 x P60) 600,000 Ordinary Shares (10,000 x P40) 400,000 SharePremium -SV 200,000
Oct. 8 Cash (7,500 x P50) 375,000
Ordinary Shares (7,500 x P40) 300,000 Share Premium -SV 75,000
Oct. 21 Land 112,000
Ordinary Shares (2,500 x P40) 100,000 Share Premium -SV 12,000
Oct. 26 Organization Expense 60,000
Ordinary Shares (1,000 x P40) 40,000 Share Premium -SV 20,000 CASE 3 NO PAR ,NO STATED VALUE Oct. 2 Cash (10,000 x P60) 600,000 Ordinary Shares 600,000