Prepare journal entries to record the transactions

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Question - Brook Company was organized at the beginning of current year. The entity provided the following transactions affecting shareholder's equity:

1. The entity was authorized to issue share capital as follows: Preference share capital, P100 par, 30,000 shares

Ordinary share capital, P50 par value, 100,000 shares

2. 40.000 ordinary shares of were issued for cash at P60 per share.

3. 10,000 preference shares were issued at P120 for cash.

4. 10.000 preference shares were subscribed at par value.

5. P400,000 was received on the above subscription to preference shares.

6. 1.000 preference shares were issued in payment of legal fees of P100,000 in connection with organizing the corporation.

7. 20.000 ordinary shares were issued for property, plant and equipment which had a fair value of P1,300,000.

8. 15,000 ordinary shares were subscribed for at par.

9. Forty percent of the ordinary share capital subscription was collected.

10. The balance owing on the subscription described in 4 and 5 was collected, and the preference shares were issued.

11. The net income for the current year was P2,000,000.

Required -

a. Prepare journal entries to record the transactions using the memorandum method.

b. Present the shareholders' equity in the statement of financial position.

Reference no: EM132768602

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