MASTERY OF CLASSIFICATION OF ACCOUNT TITLES

PROBLEM 1. The following selected accounts and balances shown below were gathered from
SANA MAPERFECT KO INE KAY 8 POYNTS INE. adjusted trial balance as of December 31, 2023:

Petty Cash Fund P10,000

Cash in Bank - BPI Current Account No. 300123 1,175,000
Cash in Bank - BPI Current Account No. 214567, (overdraft) (25,000)
Accounts Receivable 880,000
Bonds Payable, due in 2024 1,000,000
Notes payable - BPI, due on November 30, 2024 500,000
Mortgage payable - BDO, due on December 31, 2026 900,000
Notes payable - BPI, due on November 30, 2025 200,000
Cash Dividends Payable 80,000
Office supplies 40,000
Inventory 620,000
Financial assets at Fair Value through Profit or Loss 153,000
Accumulated depreciation -- Building 400,000
Investment in associates 1,020,000
Income tax payable 228,000
Accounts payable 248,000
Building 2,200,000
Equipment 450,000
Accumulated depreciation - Equipment 50,000
Interest payable 92,000
Advances from customers 800,000
Utilities Payable 30,000
Land 1,600,000
Prepaid Advertising 70,000

1
PROBLEM 2. MANIFESTING NA MAANSWERAN KO NA INE COMPANY FINANCIAL
STATEMENT AS OF DECEMBER 31, 2023

Wages payable P 250,000

Cash in Bank-Bank of Commerce No. 14344 175,000
Cash in Bank - Bank of Commerce No. 214567, overdraft (35,000)
Cash in Bank-Metrobank No, 888123, overdraft (66,000)
Bonds payable, due in 2024 600,000
Cash dividends payable 140,000
Prepaid expenses 136,000
Inventory 820,000
Long-term funds 525,000
Financial assets at Fair Value through Profit or Loss 153,000
Accumulated depreciation-PPE 400,000
Financial assets at Fair Value through Other Comprehensive Income 300,000
Discount on bonds payable 48,000
Investment in associates 1,020,000
Income tax payable 228,000
Accounts Payable 248,000
Accounts Receivable 366,000
Property, plant, and equipment 1,200,000
Goodwill 450,000
Investment in subsidiary 3,000,000
Advances from affiliated companies 900,000
Accrued interest expense 72,000
Advances from customers 800,000
Notes payable-BPI, due on November 30,2025 1,000,000
Mortgage payable-BDO, due on December 31,2026 2,000,000

2
 STATEMENT OF CASH FLOWS

A statement of cash flow is a component of financial statements summarizing the operating,

investing and financing activities of an entity.

OPERATING ACTIVITIES – generally result from transactions and other events that enter into
the determination of net income or loss.

❖ SO ALAM NATIN NA SA OPERATING ACTIVITIES – MGA ACCOUNT TITLE SA CURRENT

ASSETS AND CURRENT LIABILITIES LANG PERO MAYRON PA PALA.

❖ SO IBIG SABIHIN LAHAT NG PUMAPASOK SA INCOME AND EXPENSE ARE PART OF

OPERATING ACTIVITIES

Examples of Cash Flows from Operating Activities:

1. Cash receipts from sale of goods and rendering of services
2. Cash receipts from royalties, rental fees, commissions, and other revenue
1. Cash payments to suppliers for goods and services
2. Cash payments for selling, administrative, and other expenses
3. Cash receipts and cash payments of an insurance enterprise for premiums and claims,
annuities, and other policy benefits
4. Cash payments or refunds of income taxes unless they can be specifically identifies
with financing & investing activities.
5. Cash receipts and payments for securities held for dealing or trading purposes.

INVESTING ACTIVITIES -are the cash flows derived from the acquisition and disposal of long-
term assets and other investments not included in cash equivalent.

Examples of Cash Flows from Investing Activities:

1. Cash payments to acquire property, plant, and equipment, intangibles and other long-
term assets
2. Cash receipts from sales of property, plant, and equipment, intangibles and other long-
term assets.
3. Cash payments to acquire equity or debt instruments of other entities and interests in
joint ventures
4. Cash advances and loans to other parties (other than advances and loans made by
financial institution)
5. Cash receipts from repayment of advances and loans made to other parties
6. Cash payments of future contract, forward contract, option contract, and swap
contract
7. Cash receipts from future contract, forward contract, option contract, and swap
contract

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FINANCING ACTIVITIES- are the cash flows derived from the equity capital and borrowings of
the entity.
1. Cash receipts from issuing shares or other equity instruments
2. Cash payments to owners to acquire or redeem the enterprise’s shares
3. Cash receipts from issuing debentures, loans, notes, bonds, mortgages, and other
short-term or long-term borrowings
4. Cash payments for amounts borrowed
5. Cash payments by a lessee for the reduction of the outstanding principal lease liability

❖ WORDS NA MALALAMAN MONG INFLOW (ADDITION )

❖ PROVIDED, PROCEEDS, RECEIPTS, ADVANCES FROM, ISSUE, SALE, DISPOSE,
RECEIVED, LOANS FROM, DUE TO

❖ WORDS NA MALALAMAN MONG OUTFLOW (DEDUCTIONS)

❖ USED, PURCHASE, ACQUIRE, PAID, PAYMENTS, LOANS TO, DUE FROM,
ADVANCES TO

PROBLEM (DIRECT METHOD)

1. Purchase of land by issuing bonds. P500,000

2. Proceeds from issuing bonds. 1,000,000
3. Purchases of inventory. 1,900,000
4. Purchases of treasury stock. 300,000
5. Loans made to affiliated corporation. 700,000
6. Dividends paid to preferred stockholders. 200,000
7. Proceeds from issuing preferred stock. 800,000
8. Proceeds from sale of equipment. 100,000
9. Cash received from customers. 1,800,000
10. Payment of salaries of employees. 650,000
11. Payment of utilities. 40,000

Determine the following:

The net cash provided (used) by operating activities during 2023 is

The net cash provided (used) by investing activities during 2023 is
The net cash provided (used) by financing activities during 2023 is

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KERIBELS provided the following information on selected transactions during 2023:
1.Proceeds from sale of land P500,000
2.Proceeds from issuing bonds 1,000,000
3.Purchases of treasury stock 300,000
4.Dividends paid to preferred stockholders 200,000
5.Proceeds from issuing preferred stock 2,000,000
6.Proceeds from sale of equipment 100,000
7.Purchase of long-term investments 400,000

Determine the following:

The net cash provided (used) by investing activities during 2023 is
The net cash provided (used) by financing activities during 2023 is

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PAANO HIT FORMAT PAGSOLVE HA INDIRECT METHOD?

6
INDIRECT METHOD
DIRI NA MAKAKASHIFT reported net income of P200,000 for the year ended December 31,
2023. Included in net income were depreciation expense of P10,400, gain on sale of land of
P50,000, and a loss on sale of equipment of P11,000. Each of the following accounts increased
(decreased) during 2023:
Accounts receivable P(20,200)
Inventory 40,500
Prepaid rent 16,800
Office supplies (12,000)
Financial Assets at Fair Value through Profit or Loss 10,000
Accounts payable (28,800)

What is the amount of cash provided (used) by operating activities for the year ended
December 31, 2023?

THANK YOU G. NA G NA reported net income of P39,000 for the year ended
December 31, 2023. Included in net income were depreciation expense of P8,400
and a gain on sale of equipment of P1,700. Each of the following accounts
increased during 2023:
Accounts receivable. P2,200
Inventory. 4,500
Prepaid rent. 6,800
Available-for-sale securities. P1,000
Accounts payable. P5,000

What is the amount of cash provided by operating activities?

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 SHAREHOLDER’S EQUITY

CONCEPT
Issued shares The number of shares (shares that are fully paid for) that the
corporation has issued to its shareholders as of a specific date.

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 Subscribed shares The number of shares that has been subscribed but not yet fully paid
and therefore still unissued.
Outstanding The shares of stock that have been issued and are still in the hands of
shares the shareholders as of a specific date.
Treasury shares These are issued to shareholders & reacquired by corporation but not
retired

Legal Capital vs. Contributed Capital

Par Value Shares Legal Capital* Contributed

Capital
Preference Share Capital Added Added
Premium: Preference Share Capital Ignored Added
Subscribed Preference Share Capital Added Added
Premium: Subscribed Preference Share Capital Ignored Added
Ordinary Share Capital Added Added
Premium: Ordinary Share Capital Ignored Added
Subscribed Ordinary Share Capital Added Added
Premium: Subscribed Ordinary Share Capital Ignored Added
Subscription Receivable current Ignored Ignored
Subscription Receivable noncurrent Ignored Deducted
Treasury Shares at cost Ignored Ignored
* Legal capital is the total consideration received (inclusive of excess over stated value) in case of
no-par value shares.

❖ LEGAL CAPITAL – CAPITAL NA HINDI PWEDENG GALAWIN NG CORPORATION

UNTIL THEY LIQUIDATE. THE PURPOSE IS FOR THE SECURITY OF THE CREDITORS
CONSIDERING NA THEY HAVE LIMITED LIABILITY CHARACTERISTICS

❖ LEGAL CAPITAL @ PAR VALUE

4 ACCOUNT TITLES ONLY

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 1. Preference Share Capital
2. Subscribed Preference Share Capital
3. Ordinary Share Capital
4. Subscribed Ordinary Share Capital

✓ IGNORE UNG SHARE PREMIUM, WALA KANG PAKI ALSO SA

SUBSCRIPTION RECEIVABLE, SA RETAINED EARNINGS AND TREASURY
SHARES.

❖ LEGAL CAPITAL @ STATED VALUE OR NO PAR VALUE

5 ACCOUNT TITLES ONLY

1. Preference Share Capital
2. Subscribed Preference Share Capital
3. Ordinary Share Capital
4. Subscribed Ordinary Share Capital
5. ALL SHARE PREMIUM INCLUDING THE SHARE PREMIUM FROM TREASURY
SHARES.

KUMBAGA ISAMA MO NA LAHAT PATI MGA MAGULANG AT MGA KAMAG

ANAK MO. WHAA TAWA MUNA KAYO. CHARRROOOOT. HAHA

✓ WALA KANG PAKI SA SUBSCRIPTION RECEIVABLE, SA RETAINED

EARNINGS AND TREASURY SHARES.

➢ SO TRY TO OBSERVE WHAT IS THE SIMILARITES AND DIFFERENCES NILANG DALAWA?

❖ CONTRIBUTED CAPITAL
6 ACCOUNT TITLES ONLY
1. Preference Share Capital
2. Subscribed Preference Share Capital
3. Ordinary Share Capital
4. Subscribed Ordinary Share Capital

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 5. ALL SHARE PREMIUM INCLUDING THE SHARE PREMIUM FROM TREASURY
SHARES.
6. SUBSCRIPTION RECEIVABLE - DEDUCTION INE MGA PEOPLE

SUBSCRIPTION RECEIVABLE DAPAT NON CURRENT, COLLECTIBLE BEYOND 1

YEAR OR SILENT HA PROBLEM. DEDUCTION SA PAGCOMPUTE SA
CONTRIBUTED CAPITAL AND MALAMANG SA SHAREHOLDERS EQUITY GYAP.

KASI PAG CURRENT HIYA OR COLLECTIBLE WITHIN 1 YEAR, PART SIYA NG

CURRENT ASSET. ADDITION SIYA DOON SA CURRENT ASSETS

• MALAMANG SA MALAMANG WALA KA PADIN PAKI SA TREASURY SHARES AND

RETAINED EARNINGS.
• NAIINTINDIHAN NA BA? NOW ALAM NA SAAN NAGKAMALI? NAGKAMALI KASI
SINAGOT UNG MALING TAO… AY UNG SAGOT PALA.

❖ PAANO NAMAN ICOMPUTE UNG OUTSTANDING SHARES?

➢ ISSUED SHARES LESS TREASURY SHARES IS EQUAL TO OUTSTANDING SHARES

➢ WHY DEDUCT TREASURY SHARES? SINCE DIRI NAMAN HIYA OUTSTANDING KASI
HINDI NA SIYA HAWAK NG SHAREHOLDERS KASI BINILI MISMO NG COMPANY
UNG SARILING SHARES NIYA.
➢ SIGURO AFTER NIYANG IBENTA, NAMISS NIYA KAYA BINILI NYA ULIT
➢ OR SIGURO HINDI PA SIYA NAGSAWA. HAHAHA
➢ OR SIMPLY STATED, BINALIKAN NIYA UNG EX NIYA. WHAHAA CHAROOOT. KAYA
HINDI NA SIYA OUSTANDING OR NA SA LABAS TUMATAYO,(OUT-STANDING)
KASI PINAPASOK NIYA ULIT SA PUSO NIYA.

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PROBLEMS

MAIINTINDIHAN KO NA INE Corporation had the following equity accounts for the
year ended December 31, 2023:
Preference shares with a par value of P12 P 1,200,000
Ordinary shares with a stated value of P15 1,875,000
Subscribed preference shares 444,000
Subscribed ordinary shares @ stated value 300,000
Share premium – ordinary 250,000
Share premium-preference 230,000
Share premium - treasury 700,000
Subscription receivable – preference 600,000
Subscription receivable - ordinary 220,000
Retained earnings 1,300,000
Treasury shares - ordinary at P20 per share (140,000)

Determine the correct amount of the following:

Total legal capital
Total contributed capital
Number of outstanding ordinary shares
Total shareholders' equity – DO DA MATH MO LANG LAHAT YAN UNG SAGOT IS
5,339,000

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ISSUANCE/SUBSCRIPTION OF SHARE CAPITAL
How to account for shares issued?
➢ For cash consideration
o Cash received shall be absorbed first by total par or stated value ; excess shall be
credited to share premium
➢ For noncash consideration
o Shares issued shall be measured following this order of priority:
▪ Fair value of the noncash consideration received
▪ Fair value of shares issued
▪ Par value of shares issued (no share premium)

How to account for incurrence of share issuance costs?

It shall be debited following this order of priority:
➢ Share premium
➢ Retained earnings

Note: If there is subscription receivable, check the collectability from the reporting date:
❖ If collectible within a year, part of current other receivable
❖ If collectible more than a year, deduction from equity
TREASURY SHARE TRANSACTIONS
➢ Reacquisition
Cost method is used in accounting for treasury shares. In other words, treasury shares
are measured at cost.
Consideration Given Cash Noncash
What is the cost? Cash Payment Carrying Amount of Asset
Surrendered

➢ Subsequent Reissuance
Reissue Price = Cost Reissue Price > Cost Reissue Price < Cost
Cash xx Cash xx Cash xx
Treasury Shares xx Treasury Shares xx Share Premium-TS xx
Share Premium –TS xx Retained Earnings xx
Treasury Shares xx
Note: Cash represents reissue price of TS; Treasury shares represent cost of TS

1. In the context of the Revised Conceptual Framework, how should a company determine the boundaries
of its reporting entity?
A. Based on industry standards

13
 B. Based on geographical location
C. Based on legal form and economic substance
D. Based on the size of the company

2. When presenting financial information, what does the Revised Conceptual Framework emphasize
regarding the format and structure of financial statements?
A. It prescribes a specific format for all companies to follow.
B. It encourages creativity in presentation to capture stakeholders' attention.
C. It emphasizes clarity, understandability, and comparability.
D. It requires the use of graphical representations for all financial data.

3. According to PAS 1, where should a company disclose its significant accounting policies?
A. Only in the notes to the financial statements
B. Only in the auditor's report
C. In the statement of changes in equity
D. In a separate section of the statement of comprehensive income.

4. Fair presentation is achieved by the application of PFRS along with additional disclosures when
necessary. Which of the following statements regarding disclosure is correct?
A. Each PFRS gives specific disclosure requirements, additional disclosures are not required to be given
voluntarily by management.
B. Additional disclosures may be given so that management can present information in a way that
delivers the most positive message about an entity's financial position and performance.
C. Additional disclosure is only necessary when an entity departs from the requirements of an PFRS
because its application would be misleading and depart from the objectives if the Conceptual
Framework.
D. Information must be presented in a manner that provides relevant, reliable, comparable and
understandable information.

5. If a company classifies a loan as a long-term liability in the statement of financial position, what does it
imply?
A. The loan will mature within the next 12 months.
B. The loan will mature after 12 months.
C. The company does not have to repay the loan.
D. The loan is considered a current liability.

6. Which of the following statements is correct?

I.Revision of the Conceptual Framework will not automatically lead to changes in Standards that are
inconsistent with the revised concepts.
II.The Conceptual Framework is not a Philippine Financial Reporting Standard.
III.Whenever there is a conflict between the Conceptual Framework and an accounting standard, the
requirements of the Conceptual Framework will prevail.
A. I & III only
B. II & III only

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 C. I & II only
D. I, II & III

7. For the presentation of other comprehensive income, entities have a choice of:
I.A single statement: Statement of profit or loss and other comprehensive income
II.Two consecutive statements: Statement of profit or loss and Statement of comprehensive income
A. I only
B. II only
C. Both I and II
D. Neither I nor II

8. The financial statements are not if, by the selection or presentation of information, they
influence the making of a decision or judgment in order to achieve a predetermined result or outcome.
A. Neutral
B. Free from error
C. Complete
D. Predictive value

9. Which accounting standard body in the Philippines that monitors the technical activities of the IASB and
invites comments on exposure drafts of proposed IFRSS as these are issued by the IASB?
A. Auditing and Assurance Standards Council
B. Financial and Sustainability Reporting Standards Council
C. Financial Reporting Standards Council
D. Professional Regulatory Board of Accountancy.

15
10. Which of the following is not an example of cash flows from operating activities?
A. Cash receipts from the sale of goods and the rendering of services
B. Cash receipts and cash payments of an insurance entity for premiums and claims, annuities and
other policy benefits
C. Cash receipts and payments from contracts held for dealing or trading purposes
D. Cash receipts from sales of property, plant and equipment, intangibles and other long-term
assets

11. Assets and liabilities, and income and expenses, may not be offset unless
A. Required by management
B. Permitted by PFRS
C. Permitted by Board of Accountancy
D. Required by Chief Financial Officer

12. WARAY MAshift is the sole owner of Shift's

Appliances. WARAY MASHIFT borrowed P5 million to buy a new home to be used as his personal
residence. This liability was not recorded in the records of SHIFT Appliances. What is the accounting rule
applied on this situation?
A. Entity concept
B. Conservatism principle
C. Matching principle
D. Going-concern assumption

13. In accordance with PAS 1 Presentation of Financial Statements, which one of the following statements
is correct?
A. Assets and liabilities must be presented broadly in the order of their liquidity.
B. Assets and liabilities can be offset if they result from the same transaction or event.
C. Intangible assets must be presented separately in the statement of financial position.
D. The length of an entity's operating cycle must be disclosed if it is less than 12 months.

14. In a statement of cash flows (using indirect approach for operating activities) an increase in inventories
should be presented as a(n)
A. Outflow of cash.
B. Addition to net income.
C. Inflow and outflow of cash.
D. Deduction from net income.

15. When a corporation issues its ordinary shares in payment for services, the most appropriate basis for
recording the transaction is the
A. fair value of the services received.
B. par value of the shares issued.
C. fair value of the shares issued.
D. Any of these provides an appropriate basis for recording the transaction.

16. If shares are issued for cash consideration, the proceeds shall be measured by the:
A. Fair value of the shares issued
B. Fair value of the noncash consideration received

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 C. Par value of the shares issued
D. Face value of the cash consideration received

17. When a corporation declares and pays dividends, how does it impact the accounting equation?
A. Increases assets and decreases liabilities
B. Increases liabilities and decreases equity
C. Decreases equity and decreases assets
D. Increases assets and increases equity.

18. What is the primary source of retained earnings for a corporation?

A. Capital stock issuance
B. Dividend payments
C. Net income
D. Changes in market value

19. When a corporation buys back its own shares of stock, how is the purchase of treasury shares
recorded?
A. Increase in equity by crediting the Treasury Shares account.
B. Decrease in equity by debiting the Treasury Shares account.
C. Increase in assets by debiting the Cash account
D. Decrease in liabilities by debiting Share Dividends Payable account.

20. Freshmen Corporation has the following share capital transactions during 2024:
1) Issued 10,000 shares with par value of P10 per share for a total consideration of P 160,000.
2) Received share subscriptions for 20,000 shares at a subscription price of P22 per share. Only half of
the subscriptions were collected by the end of the year.
How much is the total share premium arising from the share transactions above?
A. P 60,000
B. P320,000
C. P300,000
D. P180,000

1. Fair presentation is achieved by the application of PFRS along with additional disclosures when
necessary. Which of the following statements regarding disclosure is correct?
A. Each PFRS gives specific disclosure requirements, additional disclosures ure not required
to be given voluntarily by management.
B. Additional disclosures may be given so that management can present information in a
way that delivers the most positive message about an entity's financial position and
performance,
C. Additional disclosure is only necessary when an entity departs from the requirements of
an
PFRS because its application would be misleading and depart from the objectives if the
Conceptual Framework.

17
 D. Information must be presented in a manner that provides relevant, reliable, comparable
and understandable information.

2. Which of the following is NOT a constraint on the concept of a Conceptual Framework for
Financial reporting?
A. Its application may only benefit certain groups.
B. A framework is time-consuming and costly to develop.
C. There is a historical lack of consistency between accounting standards.
D. External regulators impose their own desires on reporting requirements.

3. In a statement of cash flows which of the items below would NOT appear as an outflow of
cash?
A. The purchase of long-term investment
B. The profit or loss expense for depreciation for the year
C. The dividends paid to preference shareholders during the year
D. The nominal value of loan notes redeemed at par during the year

4. Wizard Shop purchased inventory for P180,000 at a closing sule of a competitor. Because the
inventory was worth P230,000, Wizard Shop valued the inventory in its subsequent Statement of
Financial Position at P230,000. This is a violation of:
A. Historical cost principle B. Comparability
C. Revenue recognition D. Matching principle

6. In accordance with PAS 1 Presentation of Financial Statements, which one of the following
statements is correct?
A. Assets and liabilities must be presented broadly in the order of their liquidity.
B. Assets and liabilities can be offset if they result from the same transaction or event.
C. Intangible assets must be presented separately in the statement of financial position.
D. The length of an entity's operating cycle must be disclosed if it is less than 12 months.

7. In a statement of cash flows (using indirect approach for operating activities) an increase in
assets should be presented as a(n)
A. Outflow of cash.
C. Addition to net income.
B. Inflow and outflow of cash.
D. Deduction from net income.

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8. Which accounting standard body in the Philippines that monitors the technical activities of the
IASB and invites comments on exposure drafts of proposed IFSs as these are issued by the JASB?
A. Auditing and Assurance Standards Council
B. Financial and Sustainability Reporting Standards Council
C. Financial Reporting Standards Council
D. Professional Regulatory Board of Accountaney.

9. Which one of the following would not be considered un advantage of the corporate form of
organization?
A. .Limited liability of owners
B.Continuous life
C.Separate legal existence
D.Govemment regulation

10. If shares are issued for noncash consideration, the proceeds shall be measured by the:
A. Pair value of the shares issued
B. Fair value of the noncash consideration received
C. Par value of the shares issued
D. Cost of the noncash consideration received

11. The maximum number of shares of stock that the government gives a corporation permission
to issue is the
A. Granted shares
B. Issued shares
C. Authorized shares
D. Outstanding shares

12. Which ONE of the following is stated as an underlying assumption according to the
Conceptual Framework for Financial Reporting?
A. Neutrality
B. Relevance
C. Accruals
D. Going concern

13. Based on PAS 1, which of the following does not comprise a set of financial statements?
A. Statement of financial position as at the end of the period
A. Statement of profit or loss and other comprehensive income, changes in equity and cash
tow for the period
B. Report of the entity's sources of funding
C. Comparative information in respect of the preceding period and notes, comprising
significant accounting policies and other explanatory information.

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14. Which item below is not a current liability?
A. Uneared revenue
B. Short-term bank loan
C. Share dividends distributable
D. Accounts payable

15. Which of the following is NOT an acceptable presentation of the balance sheet?
A. Assets presented in the order of liquidity
B. Trade & other payables as part of current liabilities
C. Deferred tax liabilities (assets), presented as part of current liabilities (current assets)
D. Provisions presented as part of the liability section

TEST III-Journal Entries

BISLA AKO MAKA SEVEN POINTS DDI Company was incorporated on FEBRUARY 1, 2023, with the
following transactions affecting shareholders' equity:
FEBRUARY
1. The SEC approved BISLA Company's authorized capitalization of 100,000 ordinary shares
with a P50 par value.
2. BISLA subscribed 50% of the authorized capitalization at P80 per share.
3. BISLA paid 75% of the subscription in FEBRUARY 2.
4. 10,000 ordinary shares were issued to BBI KO for cash at P60 per share.
5. 2,000 ordinary shares were issued to MHANG THORNEY in payment of legal fees of
P120,000 in connection with organizing the corporation.
6. 8,000 ordinary shares were issued to MDALI for a machine which had a fair value
P500,000.
7. The balance owing on the subscription described in FEBRUARY 2 and 3 was collected from
Steve.
8. A 20% bonus issue were declared and distributed to shareholders. The current market
price of the share was P55.
9. Closed the net income of P4,000,000 to retained earnings.
10. The company declared and paid cash dividends of P10 per share.

Requirement: Prepare journal entries to record the transactions using memorandum entry
method. Use the format below.

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