Reference no: EM132864389

Asia Corporation began operations on January 1, 2021. The company was authorized to issue 60,000 shares of P10 par value ordinary share and 120,000 shares of 10%, P100 par value convertible preference share.

You noted the following transactions involving shareholders' equity during 2021:

1. Jan. 1 Issued 1,500 ordinary shares to the corporation promoters in exchange for property valued at P510,000 and services valued at P210,000. The property costs P270,000 3 years ago and was carried on the promoters' books at P150,000.
2. Jan. 31 Issued 30,000 shares of convertible preference share at P150 per share. Each share can be converted to five shares of ordinary share. The corporation paid P225,000 to an agent for selling the shares.
3. Feb. 15 Sold 9,000 shares of ordinary share at P390 per share. The corporation paid issue costs of P75,000.
4. May 30 Received subscriptions for 12,000 shares of ordinary share at P450 per share
5. Aug. 30 Issued 2,100 ordinary shares and 4,200 preference shares in exchanged for a building with a fair market value of P1,530,000. The building was originally purchased for P1,140,000 by the investors and has a book value of P660,000. In addition, 1,800 shares of ordinary share were sold for P720,000 cash.
6. Nov. 15 Payments in full for half of the subscriptions and partial payments for the rest of the subscriptions were received. Total cash received was P4,200,000. Ordinary shares were issued for the fully paid subscriptions.
7. Dec. 1 Declared a cash dividend of P10 per share on preference share, payable on December 31 to shareholders of record on December 15, and P20 per share cash dividend on ordinary share, payable on January 15, 2022 to shareholders of record on December 15, 2021.
8. Dec. 31 Paid the preference share dividend. Net income for the first year of operations was P1,800,000

Required:

Question a: Prepare the necessary journal entries for each transaction and determine the following

1. Ordinary share
2. Paid-in capital in excess of par value of preference share
3. Paid-in capital in excess of par value of ordinary share
4. Retained earnings
5. Total shareholders' equity