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problem 1 (Retirement, Conversion and Treasury Shares)
The shareholders equity of Adana Publishing Company shows the following balances:
5% Preference Share Capital, P 50 par value,
20,000 issued and outstanding shares P 1,000,000
Ordinary Share Capital, P 20 stated value
100,000 issued and outstanding shares P 2,000,000
Preference Share Premium 300,000
Ordinary Share Premium 400,000
Retained Earnings 1,250,000
The following transactions occurred:
- 1,000 preference shares were retired at P 78 per share.
- Another 800 preference shares were retired at P 62 per share.
- 2,000 preference shares were converted into ordinary shares with a ratio of 1 PS into 4 shares.
- 1,500 preference shares were converted into ordinary shares with a ratio of 1 PS into 6 shares.
- Reacquired 2,000 ordinary shares at P 23 per share.
- Reissued all the treasury shares at P 21 per share.
Requirements:
- Prepare the journal entries for the transactions occurred.
- Prepare the Shareholders Equity at year-end.
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