XYZ Corporation was incorporated with an authorized issue of 1,000, 6% preferenc

ID: 2512488 • Letter: X

Question

XYZ Corporation was incorporated with an authorized issue of 1,000, 6% preference shares, par value P100 each and 10,000, P10 par ordinary shares.

Following are the selected transactions of XYZ for the month of January 2016

1.) Subscription at par:

Robert Cruz 1,000 ordinary shares

Jessica Reyes 200 preferred shares

Grace Sanchez 3,000 ordinary shares

6.) Received ½ of the payment of the above subscription.

11.) Issuances of shares for cash

Lorna Vera 100 preferred shares at P105

Melisa Cruz 1,000 ordinary shares at P25

17.)Received full payment of the balance of January 2 subscription and issued stock certificate.

21.) Hired the services of Axis Consultancy Company in exchange for 2,000 ordinary shares. The market value of the services is P50,000.

23.) XYZ purchased 1,000 of its ordinary shares issued to Alma Santos at P40 per share.

30 .) During the month the company earned total revenues of P 1,000,000 and incurred expenses equivalent to 60% of total revenues.

Required:

Prepare the statement of stockholders’ equity.

Explanation / Answer

Statement of Stockholders' Equity

Paid in Capital:

6% Preferred Stock, P100 par, 1,000 shares authorized and 300 Shares issued

(Issued Shares = Jessica 200 + Lorna Vera 100)

30000

Common Stock, P10 par value, 10,000 Shares authorized and 7,000 Shares Issued

(Issued Shares = Robert 1000 + Grace 3000 + Melisa 1000 + Axis Consultancy 2000 = 7000)

70000

Total Capital Stock

100000

Additional Paid in Capital:

In excess of par - preferred stock

(100 Shares Issued to Lorna x (Issue Price P105 – Par Value 100) i.e. (100*5)

$500

In excess of stated value - common stock (1000*15+30,000)

$45,000

Total additional paid in capital

$45,500

Total paid in capital

$145,500

Retained Earnings (Revenue 1,000,000 - 1,000,000*60% expense)

400000

Total Paid in Capital and retained earnings

545500

Less: Treasury Stock (1000*P40)

40000

Total Stockholders' Equity

505500

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