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Problem #26
Recording Effects of Shareholders' Equity Transactions in Ledger Accounts
and Preparing Shareholders' Equity Section of Statement of Financial Position
The following events and transactions relate to the shareholders equity accounts of the
Galvez Corporation for 2017:
Jan. 3
The articles of incorporation was received, authorizing Galvez Corporation
to issue 100,000 shares of P5 par ordinary shares and 30,000 shares of P50
After st
par preference shares.
8,000 ordinary shares were issued to the incorporators of the business for
1,000 preference shares were sold for P56 per share.
Subscriptions to 12,000 ordinary shares were sold. The subscription price
was P15 per share; one-third of the total was received as a down payment.
200 preference shares were issued to the lawyers in payment for legal
services rendered in drawing up the articles of incorporation. A value of
Feb. 1
P56 per share was deemed appropriate.
One-third of the subscription price of the subscribed shares was received.
Galvez Corporation purchased 2,000 ordinary shares from one of the
Mar. 1
incorporators for P14 per share.
The final balance due was received on the subscribed shares. The shares
were issued .
Galvez Corporation sold 500 shares of treasury stock for P17.50 per share.
May 30
Galvez received a piece of machinery as a donation from Cabrera
Equipment, Inc. The machinery has a market value of P75,000.
Sep. 15
Galvez sold, for P13.50 per share, 500 shares of the treasury stock
purchased on Feb. 15.
The balance of the retained earnings account after all 2017 entries is P36,400.
1. Prepare T-account entries for each of these events and transactions. Do not make
entries in journal form, but instead set up the T-accounts you need and post your
entries directly to the T-accounts.
2. Prepare the shareholders' equity section of Galvez Corporation's statement of
financial position.
344 | Partnership and Corporation Accounting

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