ACCOUNTING FOR XXX Share Capital xxx

XXX Share Premium

CORPORATIONS xxx

PRO-FORMA JOURNAL ENTRIES: For Stated Value Shares:

AUTHORIZATION Cash xxx

XXX Share Capital xxx
MEMORANDUM ENTRY METHOD: XSC in Excess of Stated Value
xxx
For Par Value Shares:
JOURNAL ENTRY METHOD:
Authorized to issue xxx shares of xxx
share capital with a par value of Pxxx. For Par Value Shares:

For Stated Value Shares: Cash xxx

Unissued XXX Share Capital
Authorized to issue xxx shares of xxx
xxx
share capital with a stated value of Pxxx.
XXX Share Premium
JOURNAL ENTRY METHOD: xxx

Unissued XXX Share Capital xxx For Stated Value Shares:

Authorized XXX Share Capital
xxx Cash xxx
Unissued XXX Share Capital
xxx
ISSUANCE FOR CASH XSC in Excess of Stated Value
xxx
Case 1: Issuance at par or stated
value Case 2: Issuance below par or stated
value
MEMORANDUM ENTRY METHOD:
MEMORANDUM ENTRY METHOD:
Cash xxx
XXX Share Capital xxx Cash xxx
Discount on XXX Share Capital xxx
XXX Share Capital xxx
JOURNAL ENTRY METHOD:
JOURNAL ENTRY METHOD:
Cash xxx
Unissued XXX Share Capital Cash xxx
xxx Discount on XXX Share Capital xxx
Unissued XXX Share Capital
Case 2: Issuance above par or stated xxx
value
NOTE: Under the Corporation Code of
MEMORANDUM ENTRY METHOD: the Philippines, the original issuance
of share capital at a discount is not
For Par Value Shares: allowed.

Cash xxx

Page 1 of 6
 ISSUANCE IN EXCHANGE FOR For Par Value Shares:
NON-CASH ASSETS OR
PROPERTIES Subscription Receivable XSC xxx
Subscribed XXX Share Capital
NOTE: Order of Priority xxx
Fair Value of the asset received XXX Share Premium
Fair Value of the shares issued xxx
at date of transaction
Par Value or Stated Value of For Stated Value Shares:
shares
Subscription Receivable XSC xxx
ISSUANCE IN EXCHANGE FOR Subscribed XXX Share Capital
SERVICES RENDERED xxx
NOTE: Order of Priority XSC in Excess of Stated Value
Fair Value of the services xxx
received
Fair Value of the shares issued COLLECTION OF SUBSCRIPTION
at date of transaction
Par Value or Stated Value of Cash xxx
Subscription Receivable XSC
shares
xxx
NOTE: If the shares are issued for
ISSUANCE OF STOCK
services rendered during
incorporation, PRE-OPERATING CERTIFICATES UPON FULL
EXPENSES is debited. PAYMENT

NOTE: The journal entry method is not MEMORANDUM ENTRY METHOD:

applicable in case of no-par, no-stated
value shares. Subscribed XXX Share Capital xxx
XXX Share Capital xxx
SUBSCRIPTION
JOURNAL ENTRY METHOD:
NOTE: In incorporation, at least 25% of
Subscribed XXX Share Capital xxx
the total authorized share capital must
Unissued XXX Share Capital
be subscribed and at least 25% of the
xxx
total subscriptions have been paid.
SUBSCRIPTION DEFAULTS
RECEIPT OF SUBSCRIPTION
UPON DEFAULT
Case 1: Subscription Price is equal
to Par Value or Stated Value
Receivable from Highest Bidder xxx
Subscription Receivable XSC xxx Subscription Receivable XSC
Subscribed XXX Share Capital xxx
xxx
COSTS INCURRED IN
Case 2: Subscription Price is CONNECTION WITH THE
above Par Value or Stated Value DELINQUENCY SHARES

Receivable from Highest Bidder xxx

Page 2 of 6
 Cash xxx are considered treasury shares and
the following entries will be made,
RECEIPT OF PAYMENT FROM after making the entries for upon
HIGHEST BIDDER default and for costs incurred in
connection with the delinquency sale.
Cash xxx
Receivable from Highest Bidder TRANSFER TO TREASURY
xxx SHARES

ISSUANCE OF STOCK
CERTTIFICATES UPON FULL Treasury Share Capital xxx
PAYMENT Receivable from Highest Bidder
xxx
MEMORANDUM ENTRY METHOD:
ISSUANCE OF STOCK
Subscribed XXX Share Capital xxx CERTTIFICATES UPON FULL
XXX Share Capital xxx PAYMENT

JOURNAL ENTRY METHOD: MEMORANDUM ENTRY METHOD:

Subscribed XXX Share Capital xxx Subscribed XXX Share Capital xxx
Unissued XXX Share Capital XXX Share Capital xxx
xxx
JOURNAL ENTRY METHOD:
NOTE: All subscribed shares are
issued. Shares are first given to the Subscribed XXX Share Capital xxx
highest bidder. The excess, if any, are Unissued XXX Share Capital
given to the defaulting subscriber. xxx

NOTE: If there is no bidder, all of the NOTE: If the problem is silent, use the
delinquent shares will be issued in the memorandum entry method.
name of the corporation. Such shares

ILLUSTRATIVE PROBLEM 1: (Only Memorandum Entry Method was used.)

The following selected transactions took place at the newly formed WALANG
FOREVER CORPORATION:

Aug. 1 Received authorization from SEC to issue 30,000 preference shares, P50
par value and 100,000 ordinary shares, P20 par value.
Entries: Authorized to issue 30,000 preference shares with P50 par value.
Authorized to issue 100,000 ordinary shares with P20 par value.
Aug. 2 Received subscriptions for preference shares at P60 per share from the
following:
Echos 5,000 shares
Beks 6,000 shares
Trudis 4,000 shares
A down payment of 30% was received.
Entries:
Echos: Cash 90.000

Page 3 of 6
 Subscriptions Receivable 210,000
Preferred
Subscribed Preference 250,000
Share Capital
Preference Share Premium 50,000
Beks: Cash 108,000
Subscriptions Receivable 252,000
Preferred
Subscribed Preference 300,000
Share Capital
Preference Share Premium 60,000
Trudis: Cash 72,000
Subscriptions Receivable 168,000
Preferred
Subscribed Preference 200,000
Share Capital
Preference Share Premium 40,000
Aug. 2 Received subscription for ordinary shares at P30 per share from the
following:
Chenes 20,000 shares
Gorabels 15,000 shares
A down payment of 20% was received.
Entries:
Chenes Cash 120,000
:
Subscriptions Receivable 480,000
Ordinary
Subscribed Ordinary Share 400,000
Capital
Ordinary Share Premium 200,000
Gorabe Cash 90,000
ls:
Subscriptions Receivable 360,000
Ordinary
Subscribed Ordinary Share 300,000
Capital
Ordinary Share Premium 150,000
Aug. 30 The subscribers of preference shares paid another 30% of their
subscriptions.
Entries:
Echos: Cash 90,000
Subscriptions Receivable 90,000
Preferred
Beks: Cash 108,000
Subscriptions Receivable 108,000
Preferred
Trudis: Cash 72,000
Subscriptions Receivable 72,000
Preferred

Page 4 of 6
Aug. 31 Chenes paid her subscription in full and shares of stock were issued to her.
Gorabels paid 40% of her subscription.
Entries:
Chenes Cash 480,000
:
Subscriptions Receivable 480,000
Ordinary
Subscribed Ordinary Share 400,000
Capital
Ordinary Share Capital 400,000
Gorabe Cash 180,000
ls:
Subscriptions Receivable 180,000
Ordinary
Sept. Echos and Beks paid the balance of their subscriptions and shares of stock
21 were issued to them.
Entries:
Echos: Cash 120,000
Subscriptions Receivable 120,000
Preferred
Subscribed Preference 250,000
Share Capital
Preference Share Capital 250,000
Beks: Cash 144,000
Subscriptions Receivable 144,000
Preferred
Subscribed Preference 300,000
Share Capital
Preference Share Capital 300,000
Sept. Trudis officially informed the officials of the corporation that he would not
21 be able to pay the balance of his subscription contract. Thus, the
subscription was declared delinquent and was offered for sale in public
auction.
Entry: Receivable from Highest 96,000
Bidder
Subscriptions Receivable 96,000
Preferred
Sept. Received payment from the highest bidder and shares of stock were
28 subsequently issued.
Entries: Cash 96,000
Receivable from Highest 96,000
Bidder
Subscribed Preference 200,000
Share Capital
Preference Share Capital 200,000
Sept. Gorabels paid the balance of her subscription and shares of stock were
30 issued of her.
Entries: Cash 180,000
Subscriptions Receivable 180,000

Page 5 of 6
 Ordinary
Subscribed Ordinary Share 300,000
Capital
Ordinary Share Capital 300,000

ILLUSTRATIVE PROBLEM 2: (Only Memorandum Entry Method was used.)

The NASAKTAN CORPORATION is authorized to issue 50,000 shares of ordinary share

capital with a stated value of P20. The following transactions have taken place in
relation to the share capital:

Entry Authorized to issue 50,000 ordinary shares with P20 stated value.
:
a. Issued 12,500 shares for cash at stated value.
Entry Cash 250,000
:
Ordinary Share Capital 250,000
b. Issued 2,500 shares to attorneys for services in securing corporate charter
and for preliminary legal costs of organizing the corporation. The value of
the services was P70,000.
Entry Pre-Operating Costs 70,000
:
Ordinary Share Capital 50,000
Ordinary Share Capital in 20,000
Excess of Stated Value
c. Issued 2,000 shares to the corporate promoters. Each ordinary share is
selling at P25 on this date.
Entry Pre-Operating Costs 50,000
:
Ordinary Share Capital 40,000
Ordinary Share Capital in 10,000
Excess of Stated Value
d. Issued 10,000 shares in exchange for land valued at P300,000.
Entry Land 300,000
:
Ordinary Share Capital 200,000
Ordinary Share Capital in 100,000
Excess of Stated Value
e. Issued for cash 5,000 shares at P24 per share.
Entry Cash 120,000
:
Ordinary Share Capital 100,000
Ordinary Share Capital in 20,000
Excess of Stated Value

Page 6 of 6