ADAMSON UNIVERISTY

FINANCIAL ACCOUNTING AND REPORTING 2

INCORPORATION

Using the Memorandum Entry Method and Journal Entry Method, journalize the following transactions of
SARGENTO CORPORATION
1. Sargento Corporation was authorized to issue 500,000 shares at par value of P50.
2. Sold for cash 20,000 shares at P70 per share.
3. Land with an appraised value of P750,000 was received from a shareholder. The corporation issued 10,000
shares.
4. The corporate lawyer hired by Sargento was given 2,000 shares in exchange for legal services rendered at
P120,000.
5. Received subscription for 1,000 shares at par value from a shareholder who paid 50% of the subscription.
6. Received the 50% balance of the subscription. Stock certificates were issued.
Using the Memorandum entry method, journalize the following transactions of XYZ CORPORATION:
1. XYZ Corporation was authorized to issue 20,000 shares of stock at par value of P200.
2. Issued for cash 1,200 shares at P200 par
3. 100 shares were given to Atty. Pacifico for legal services rendered.
4. Issued 3,000 shares for land received from a shareholder valued at PP750,000
5. Received P50,000 cash from a shareholder and issued 240 shares.
6. Received subscription for 100 shares at par from a shareholder. He paid 50% of the subscription.
7. Balance of the subscription is collected in full. Stock certificates were issued.
Using the same set of transactions of XYZ Corporation and the one below (no. 8), prepare the Balance Sheet of
XYZ CORPORATION under the following circumstances:
a. The subscription is on call within one year
b. The subscription is on call but longer than one year
c. The subscription is not on call
8. 250 shares were subscribed at P220 per share. A down payment of 50% was made.
 ADAMSON UNIVERSITY
FINANCIAL ACCOUNTING AND REPORTING 2
INCORPORATION

Prim Rose Corporation was organized on May 1, 2010 with the following authorization: 50,000 18%
cumulative preferred shares with a par value of PhP100 per share; 200,000 common shares with par value of
PhP50 per share.

On this date, each of the six (6) incorporators subscribed to 2,500 preferred shares and 10,000 common
shares at par value, and paid 25% down payment. Balance of both stocks are payable in two (2) equal
installments. The first installment is due on June 30, 2010, and the second installment on July 31, 2010. The
SEC approved its Articles of Incorporation. Additional transactions as follows:

June 15 Received subscriptions from various investors for 5,000 preferred shares at PhP110 per
share, with a 25% down payment.
17 Received subscriptions for 30,000 shares at PhP52 per share, with 25% down payment.
30 Received the first installment due from the incorporators.
July 01 Received full payment from June 17 subscribers. Issued the corresponding certificates.
15 Received another 25% payment from the June 15 subscribers.
18 Received land worth PhP75,000, in exchange for 1,400 common shares.
20 Two of the incorporators paid their subscription balance in full.
30 Received the balance due from the other incorporators.
 ADAMSON UNIVERSITY
FINANCIAL ACCOUNTING AND REPORTING 2
INCORPORATION

On November 1, 2011, The Spa Corporation had its Articles of Incorporation and By-Laws approved by the
Securities & Exchange Commission. It authorized the company to issue 500,000 shares of PhP50 par value
common stock. The company completed the following stock transactions prior to the opening of its recreational
facilities:

Oct 1 The five incorporators subscribed to 175,000 common shares at par as follows:
Name No. of Shares Down Payment (in PhP)
Antonio Lim 30,000 400,000.00
Andy Castillo 40,000 500,000.00
Jim Buenaventura 30,000 350,000.00
Jaime Sison 50,000 600,000.00
Tony Espiritu 25,000 300,000.00

Nov 5 The lawyer, whose fees amounting to PhP150,000.00, was given the corresponding shares for assisting
in the incorporation process.

Nov 10 Sold 10,000 shares of its common stock to various stockholders for PhP600,000.00 cash.

Dec 20 Accepted subscriptions to 120,000 shares of its common stock from Ric Rubio, Johnny Perez, Albert
Santos, Regino Samoy, and Mike Ong who subscribed to 24,000 shares each at PhP55 per share, and collected
25% down payment from each subscriber.

Dec 23 The incorporators paid another 25% of their subscription.

Dec 26 Issued to Aries Zobel 50,000 shares of its common stock for land at Redwoods which had a fair market
value of PhP2,850,000.00.

Dec 28 Three of the incorporators, Jaime Sison, Tony Espiritu, and Antonio Lim, paid the balance of their
subscriptions, and were issued stock certificates.

Dec 30 Collected payment in full from Regino Samoy and Mike Ong, and issued the corresponding stock
certificates.