At the beginning of 2023, CCC Corporation issued 20,000 ordinary shares of P20 par value and 40,000 cumulative preference shares of P20 par value for a total consideration of P1,600,000. At this date, the ordinary share was selling for P36, and the cumulative preference share was selling for P27.What amount should be credited to ordinary share capital account?
Question
At the beginning of 2023, CCC Corporation issued 20,000 ordinary shares of P20 par value and 40,000 cumulative preference shares of P20 par value for a total consideration of P1,600,000. At this date, the ordinary share was selling for P36, and the cumulative preference share was selling for P27.What amount should be credited to ordinary share capital account?
Solution
To calculate the amount to be credited to the ordinary share capital account, we need to follow these steps:
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Identify the number of ordinary shares issued: In this case, CCC Corporation issued 20,000 ordinary shares.
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Identify the par value of the ordinary shares: The par value of the ordinary shares is P20.
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Multiply the number of ordinary shares by the par value: 20,000 shares * P20/share = P400,000.
So, P400,000 should be credited to the ordinary share capital account.
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