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Seatwork 2

Hallway Company issued shares that raised P1,800,000 total, with P1,350,000 allocated to ordinary shares and P450,000 to convertible preference shares based on their market prices. Magic Lamp Corporation reported total contributed capital of P1,330,000 on its December 31, 2002 balance sheet, having issued shares of common and preferred stock during 2002, with subscriptions for additional preferred stock paid in 2003. Corridor Company's additional paid in capital account increased by P300,000 when it issued shares to compensate an attorney for services worth P500,000 at the time, with the shares having a market price of P150 each. The legal capital of May Co.

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991 views2 pages

Seatwork 2

Hallway Company issued shares that raised P1,800,000 total, with P1,350,000 allocated to ordinary shares and P450,000 to convertible preference shares based on their market prices. Magic Lamp Corporation reported total contributed capital of P1,330,000 on its December 31, 2002 balance sheet, having issued shares of common and preferred stock during 2002, with subscriptions for additional preferred stock paid in 2003. Corridor Company's additional paid in capital account increased by P300,000 when it issued shares to compensate an attorney for services worth P500,000 at the time, with the shares having a market price of P150 each. The legal capital of May Co.

Uploaded by

Lyn Abuda
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Problem 1

Hallway Company issued 20,000 shares of its P10 par value ordinary share and 40,000 shares of its P10
par value convertible preference share for a total amount of P1,800,000. At this date, Hallway’s ordinary
share was selling P20 per share and the convertible preference share was selling for P30 per share. What
amount of the proceeds should be allocated to the ordinary share and convertible preference share?
P1,350,000 & P450,000.

Problem 2

The Magic Lamp Corporation was incorporated on January 1, 2002, with following authorized
capitalization:

40,000 shares of common stock, no par value, stated value P40 per share

10,000 shares of 5% cumulative preferred stock, par value of P10 per

share

During 2002, Magic Lamp issued 24,000 shares of common stock for a total of P1,200,000 and 6,000
shares of preferred stock at P16 per share. In addition, on December 19,2002, subscriptions for 2,000
shares of preferred stock were taken at a purchase price of P17. These subscribed shares were paid for
on January 4, 2003.

What should Magic Lamp report as total contributed capital on its December 31, 2002 balance sheet? P
1,330,000

Problem 3

Corridor Company issued 6,000 shares of its P100 par common stock to Max L. as compensation for
1,000 hours of legal services performed. Max L. usually bills P500 per hour for legal services. On this data
of issuance, the stock was selling at a public trading at P150 per share.

By what amount should the additional paid in capital account of Corridor Company will increase as a
result of the issuance of those shares? P300,000

Problem 4

The stockholders’ equity of May Co. revealed the following on January 1, 2019:

Preference Share, P100 par value P230,000

Paid-in Capital in Excess of Par - Preference 80,500

Ordinary Share, P15 par value 525,000

Paid-in Capital in Excess of Par – Ordinary 275,000

Subscribed Ordinary Share 5,000

Retained Earnings 190,000

Notes Payable 400,000


Subscription Receivable — Ordinary 40,000

How much is the legal capital of the company? P760,000

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