Chapter $2-$ Shareholders' Equity

PROBLEMS

$2-1.$ The Gallery Company is authorized to issue $100,000$ shares of P$500$ par value ordinary share capital. Gallery has the following transactions during the month:

Issued $20,000$ shares at par, receiving cash.

Received a bill amounting to $P180,000$ for services securing the corporate charter and other preliminary legal costs of organizing the corporation. The bill was settled by issuing $300$ shares of ordinary share capital.

Issued $12,500$ ordinary shares in exchange for land and a building with fair values of $P5,000,000$ and $3,000,000,$ respectively.

Received cash for $6,500$ ordinary shares sold at P$550$ per share.

Received.subscription for $20,000$ shares at P$550$ per share, receiving $25\%$ down:

Collected the balance of the subscription price on the $12,000$ shares subscribed above, and share certificates were accordingly issued.

Reported profit of $P1,000,000$ for the year.

REQUIRED:

$($a$)$ Journal entries to record the foregoing transactions.

$($b$)$ Shareholders' equity section of the statement of financial position at the end of the year.