On January 1, 20x1, the shareholders’ equity section of Splash Corporation’s statement of financial position disclosed the following information:12.5% convertible preference shares (P40 par value; 150,000 shares authorized, 60,000 shares issued and outstanding)P2,400,000Ordinary shares (P5 par value; 600,000 shares authorized, 360,000 shares issued and outstanding)1,800,000Share premium9,000,000Retained earnings 13,500,000Total shareholders’ equity P26,700,000 The following equity transactions occurred during 20x1 and 20x2:On February 1, 20x1, 45,000 ordinary shares were acquired by the company for P33 perOn August 30, 20x1, 15,000 preference shares were converted to ordinary shares. One (1) preference share is convertible into one (1) ordinary At the time of conversion, the ordinary shares had a market value of P42 per share.On December 12, 20x1, the company placed a share subscription of 30,000 ordinary shares at a subscription price of P33 per The subscription contract required a cash down payment equal to 60% of the subscription price, with the balance due on February 1, 20x2.On February 1, 20x2, 25,500 ordinary shares were issued according to the subscription However, 4,500 shares were not issued because the subscriber defaulted. The subscription contract requires the subscriber to forfeit all cash advances.On April 28, 20x2, 30,000 shares held as treasury shares were reissued at P50 perOn May 19, 20x2, a special dividend of preference shares was distributed to ordinary shareholders. One hundred (100) ordinary shares entitled a shareholder to one (1) preference share. The market price of preference shares was P40 at theCash dividends are declared for preference and ordinary shares on April 30 and October 31 of each year. Semiannual cash dividends for ordinary shares are P0.50 perSplash Corporation reported a net income of P1,890,000 in 20x1 and P2,760,000 in 20X2REQUIRED:Prepare journal entries for the equity transactions above.

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Answered: Prepare journal entries for the equity…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter14: Corporation Accounting

Section: Chapter Questions

Problem 9PA: Aggregate Mining Corporation was incorporated five years ago. It is authorized to issue 500,000...

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On January 1, 20x1, the shareholders’ equity section of Splash Corporation’s statement of financial position disclosed the following information:

12.5% convertible preference shares (P40 par value; 150,000 shares authorized, 60,000 shares issued and outstanding)	P2,400,000
Ordinary shares (P5 par value; 600,000 shares authorized, 360,000 shares issued and outstanding)	1,800,000
Share premium	9,000,000
Retained earnings	13,500,000
Total shareholders’ equity	P26,700,000

The following equity transactions occurred during 20x1 and 20x2:

On February 1, 20x1, 45,000 ordinary shares were acquired by the company for P33 per
On August 30, 20x1, 15,000 preference shares were converted to ordinary shares. One (1) preference share is convertible into one (1) ordinary At the time of conversion, the ordinary shares had a market value of P42 per share.
On December 12, 20x1, the company placed a share subscription of 30,000 ordinary shares at a subscription price of P33 per The subscription contract required a cash down payment equal to 60% of the subscription price, with the balance due on February 1, 20x2.
On February 1, 20x2, 25,500 ordinary shares were issued according to the subscription However, 4,500 shares were not issued because the subscriber defaulted. The subscription contract requires the subscriber to forfeit all cash advances.
On April 28, 20x2, 30,000 shares held as treasury shares were reissued at P50 per
On May 19, 20x2, a special dividend of preference shares was distributed to ordinary shareholders. One hundred (100) ordinary shares entitled a shareholder to one (1) preference share. The market price of preference shares was P40 at the
Cash dividends are declared for preference and ordinary shares on April 30 and October 31 of each year. Semiannual cash dividends for ordinary shares are P0.50 per
Splash Corporation reported a net income of P1,890,000 in 20x1 and P2,760,000 in 20X2

REQUIRED:

Prepare journal entries for the equity transactions above.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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