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Exercise 10-6(Acquisition of Treasury Shares and Conversion of Preference Shares into Ordinary Shares) ...

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Accounting

Exercise 10-6(Acquisition of Treasury Shares and Conversion of Preference Shares into Ordinary Shares)
Jazul Company had the following equity balances reported in its December 31,2013 statement of financial position
10,000,10% Preference Share Capital, convertible, P100 par, P1,000,000
500,000 Ordinary Share Capital, P5 stated value, P2,500,000
Preference Share Premium, P200,000
Paid-in capital in Excess of Stated Value, P1,500,000
Retained Earnings, P1,200,000
During 2014, the following transactions relating to share capital have taken place:
a.5,000 ordinary shares were reacquired at P10. Subsequently, 4,000 shares were reissued at P12 per share and the 1,000 shares were reissued at P7 per share.
b.1,000 preference shares were converted into ordinary shares. ' Ten ordinary shares were issued for every preference share converted.
Instructions:
Prepare journal entries to record the preceding transactions.
State the number of preference shares and ordinary shares issued and outstanding.
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