CORPORATIONS ILLUSTRATIONS
Subscriptions Receivable
250,000
Subscribed Share Capital
250,000
(1,000,000 x 25%)
Cash (250,000 x 25%)
62,500
Subscriptions Receivable
62,500
Note: If the type of share capital is specified, the
account title to be used is the specific type of share
capital. (e.g. if the share is ordinary share, account
title to be used is Ordinary Share, Subscribed
Ordinary Share, Share Premium – Ordinary etc.)
3.) Cash (250,000 x 75%)
187,500
Subscriptions Receivable
187,500
Subscribed Share Capital 250,000
Share Capital
250,000
4.) Cash (1000x100x30%)
30,000
Subscriptions Receivable
70,000
Subscribed Share Capital
100,000
5.) Cash (500x120)
60,000
Share Capital (@par)
50,000
Share Premium (in excess of par) 10,000
6.) Income Summary
Accumulated Profits
Land
150,000
Share Capital
Share Premium
50,000
50,000
100,000
50,000
Note: If non cash consideration is received it should
be recorded at (in order of priority):
1. Fair market value of non cash consideration
received
2. Fair market value of share capital issued
3. Par value of share capital
Share Capital is always recorded at par value or
stated value and any excess of par will be recorded in
Share Premium account.
Consultation Fee
130,000
Share Capital
100,000
Share Premium
30,000
Note: Since the amount of services is not given, it
shall be recorded on the fair market value of shares
issued.
Loan Payable
Share Capital
Share Premium
50,000
40,000
10,000
Note: If exchange of liability, the basis for the value of
the share capital issued is the amount of liability set
off.
Issued shares (6M/10par)
Subscribed Shares
Treasury Shares
Outstanding Shares
Cash Dividend per share
Cash Dividend
P
Jan 15
600,000
0
(200,000)
400,000 shares
x
2.50
1,000,000
Accum. Profits
1,000,000
Cash Dividend Payable
1,000,000
Jan 31 “no entry”
Mar 15 Cash Dividend Payable 1,000,000
Cash
1,000,000
From the above computation no. of shares
outstanding is 400,000 shares.
Jan 15 Accum. Profits
560,000
Share Dividend Distributable
400,000
Share Premium on Stock Dividend 160,000
(400,000sh/10sh x 14)
Jan 31 “no entry”
Mar 15 Share Dividend Distributable 400,000
Ordinary Share
400,000
Note: since it’s a small stock dividend (less than 20%,
1/10) the market value on date of declaration of P14
pesos is used because it is higher than P10 par value
Let’s further assume that instead of 1 share for every
10 share holding, the company declares 1 share for
every 5 share holding.
In this case it becomes large stock dividend (20% or
more, 1/5) and accumulated profits will be debited at
par value.
Jan 15 Accumulated Profits
800,000
Share Dividend Distributable 800,000
(400,000/5 x 10par
Jan 31 “no entry”
Mar 15 Share Dividend Distributable 800,000
Ordinary Share
800,000