FURNACE OF SAN CARLOS OF GUATEMALA

UNIVERSITY CENTER OF IZABAL -CUNIZAB-.

BACHELOR'S DEGREE IN PUBLIC ACCOUNTING AND AUDITING
FOURTH CYCLE
COURSE: AUDIT IV
Professor: Lic. César Anibal Rodas Véliz

ACCOUNTING FOR JOINT STOCK COMPANIES

1. Opening of a corporation for accounting purposes

1.1. Fully subscribed and paid-in capital

Exercise No. 1
The company La Gaviota S. A. by deed No. 46 authorized by Notary Sebastián Araujo, is constituted with an authorized
capital of Q100,000.00, which is subscribed and paid in full. Its share structure is as follows:
50% in common stock
50% in preferred shares at 10%.

All shares with a par value of Q200.00 each. And they were paid in cash (500 shares).
Pda. No. 1
Unissued common stock Q 50,000.00
Unissued preferred stock Q 50,000.00
Authorized Capital Q 100,000.00
Opening of the company "La Gaviota S. A. Q100,000.00 Q100,000.00
Pda. No. 2
Common stock Q 50,000.00
Preferred stock Q 50,000.00
Unissued common stock Q 50,000.00
Unissued preferred stock Q 50,000.00

For the subscription of 250 common shares and 250

preferred shares with a value of Q200.00 each. Q100,000.00 Q100,000.00
Pda. No. 3
Cash and Banks Q100,000.00
Common stock Q 50,000.00
Preferred stock Q 50,000.00
For the payment of 250 common shares and 250
preferred shares with a value of Q200.00 each. Q100,000.00 Q100,000.00

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1.2. Subscribes and pays less than the authorized capital
Exercise No. 2
Shareholders subscribe and pay for 250 shares (150 common shares and 100 10% preferred shares).
Pda. No. 1
Unissued common stock Q50,000.00
Unissued preferred stock Q50,000.00
Authorized Capital Q100,000.00
Opening of the company "La Gaviota S. A. Q 100,000.00 Q100,000.00
Pda. No. 2
Common stock Q30,000.00
Preferred stock Q20,000.00
Unissued common stock Q 30,000.00
Unissued preferred stock Q 20,000.00
For the subscription of 150 common shares and 100
preferred shares with a value of Q200.00 each. Q50,000.00 Q 50,000.00
Pda. No. 3
Cash and Banks Q50,000.00
Common stock Q 30,000.00
Preferred stock Q 20,000.00
For the payment of 150 common shares and 100
preferred shares with a value of Q200.00 each. Q50,000.00 Q 50,000.00

1.3. Of the authorized capital, subscribed capital is different from paid-in capital.
Exercise No. 3
Shareholders subscribe 250 shares and pay 100 common shares and 50 preferred shares at 10%.
Pda. No. 1
Unissued common stock Q50,000.00
Unissued preferred stock Q50,000.00
Authorized Capital Q100,000.00
Opening of the company "La Gaviota S. A. Q 100,000.00 Q100,000.00
Pda. No. 2
Common stock Q30,000.00
Preferred stock Q20,000.00
Unissued common stock Q 30,000.00
Unissued preferred stock Q 20,000.00
For the subscription of 150 common shares and 100
preferred shares with a value of Q200.00 each. Q50,000.00 Q 50,000.00
Pda. No. 3
Cash and Banks Q30,000.00
Common stock Q 20,000.00
Preferred stock Q 10,000.00
For the payment of 100 common shares and 50
preferred shares with a value of Q200.00 each. Q30,000.00 Q 30,000.00
1.4. Subscribed capital equal to authorized capital and partially paid with cash, assets and rights.

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Exercise No. 4
On January 2, 2017, the company called "El Condor S.. A.", with an authorized capital stock of Q800,000.00, divided into
8,000 shares, of which 6,000 are ordinary nominative shares and 2,000 are 12% preferred nominative shares, all with a par
value of Q100.00. The organizers of the same subscribe in full the authorized capital stock and pay with different goods,
securities and rights 50% of the subscribed capital, as follows:
Partner A

Underwrites:
a. 2,000 shares of common stock
b. 1,000 shares of 12% preferred stock

Pay:
a. They constitute a monetary deposit in the Banco del Café for Q50,000.00.
b. Delivery and transfer of a real estate property, accepting that the Building has a value of Q60,000.00 and the land
of Q40,000.00.
Partner B

Underwrites:
a. 2,000 shares of common stock
b. 500 preferred shares at 12%.

Pay:
a. Delivery of merchandise valued and accepted at Q125,000.00

Partner C

Underwrites:
a. 2,000 shares of common stock
b. 500 preferred shares at 12%.

Pay:
a. Accepted customer portfolio of Q25,000.00
b. Accepted delivery vehicle for Q12,500.00
c. Shares of the Company. "Los Tigres S. A." for Q22,500.000.
d. Trademarks and patents for Q8,000.00.
e. Office furniture and equipment for Q4,500.00.
f. Merchandise inventory for Q52,500.00.
Requested:
To account for the initial operations of the company until the payment of the share subscriptions.

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 Pda. No. 1
02/01/2017 Q 600,000.00
Unissued common stock Unissued preferred stock Q 200,000.00
Authorized capital Q 800,000.00
Opening of the company "La Gaviota S. A. Q 800,000.00 Q 800,000.00
Pda. No. 2 02/01/2017
Common stock
Q 600,000.00
Preferred stock
Q 200,000.00
Unissued common stock Q 600,000.00
Unissued preferred stock Q 200,000.00
For the subscription of 150 common shares and 100
preferred shares with a value of Q200.00 each. Q 800,000.00 Q 800,000.00
Calculations
Partner A
Banks Q 50,000.00
Building Q 60,000.00
Terrain Q 40,000.00
Partner B
Merchandise Q 125,000.00
Partner C
Customers Q 25,000.00
Vehicle Q 12,500.00
Equity Investments Q 22,500.00
Trademarks and Patents Q 8,000.00
Furniture and Equipment Q 4,500.00
Merchandise Q 52,500.00

Pda. No. 3 02/01/2017

Cash and Banks Q 50,000.00
Buildings Q 60,000.00
Land Q 40,000.00
Merchandise Q 177,500.00
Customers Q 25,000.00
Vehicle Q 12,500.00
Equity Investments Q 22,500.00
Trademarks and Patents Q 8,000.00
Furniture and Equipment Q 4,500.00
Common stock Q 300,000.00
Preferred stock Q 100,000.00
For the payment of 100 shares of common stock
and 50 shares with a value of Q200.00 each.
preferred
one. Q 400,000.00 Q 400,000.00
1.5. Subscribed capital other than authorized and partially paid with cash, assets and creditor obligations

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Exercise No. 5
In articles of incorporation No. 402 authorized in this city by Notary Raúl Leiva, the entity called "Aceros de Oriente, S.
A. de Oriente, S. A. de C. V." was incorporated. A.", with an authorized capital of Q2,500,000.00 made up of 6,500
common shares and 6,000 preferred shares at 12% of a nominal value of Q200.00 each.
The founding partners subscribed 3,000 common shares, which were subsequently cancelled as follows: They presented a
bank deposit for Q250,000.00; merchandise inventory for Q30,000.00; five desks for a total of Q20,000; a Mitzubishi
Model 98 automobile for Q25,000.00 and the building where the fiscal domicile of the entity will be located valued at
Q275,000.00.
In addition, 2,500 shares of 12% preferred stock were subscribed, 77% of which were paid, accepting various assets and
liabilities as follows:
Land Q300,000.00
Machinery and Equipment Q150,000.00
Mortgages onthe land Q 50,000.00
Suppliers Q 15,000.00
With the above information is requested:
a. Recording of accounting transactions
b. Balance Sheet

Pda. No. 1
Unissued common stock Q 1,300,000.00
Unissued preferred stock Q 1,200,000.00
Authorized Capital Q 2,500,000.00
To register the authorization of 6,500 common
shares and 6,000 preferred shares with a value of
Q200.00 each. Q 2,500,000.00 Q 2,500,000.00
Pda. No. 2
Common stock Q 600,000.00
Preferred stock Q 500,000.00
Unissued common stock Q 600,000.00
Unissued preferred stock Q 500,000.00
To register the subscription of 3,000 common
shares and 2,500 preferred shares with a value of
Q200.00 each. Q 1,100,000.00 Q 1,100,000.00

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 Founding Partners
Banks Q 250,000.00
Merchandise Q 30,000.00
Furniture and Equipment Q 20,000.00
Vehicles Q 25,000.00
Buildings Q 275,000.00 Q 600,000.00
New Members
Land Q 300,000.00
Machinery and Equipment Q 150,000.00
Land Mortgages -Q 50,000.00
Suppliers -Q 15,000.00 Q 385,000.00

Pda. No. 3
Cash and Banks Q 250,000.00
Merchandise Q 30,000.00
Furniture and Equipment Q 20,000.00
Vehicles Q 25,000.00
Buildings Q 275,000.00
Land Q 300,000.00
Machinery and Equipment Q 150,000.00
Land Mortgages Q 50,000.00
Suppliers Q 15,000.00
Common stock Q 600,000.00
Preferred stock Q 385,000.00
For the payment of 100 common shares and 50
preferred shares with a value of Q200.00 each. Q 1,050,000.00 Q 1,050,000.00

2. Accounting for shares

2.1. Sale of shares at a premium or discount
Exercise No. 6
1,000 common shares with a par value of Q100.00 were issued at a 50% premium.
Pda. No. 1
Common stock Q100,000.00
Unissued common stock Q100,000.00
To register the subscription of 1,000 shares
of common stock at Q100.00 each Q100,000.00 Q100,000.00
Pda. No. 2
Cash and Banks
Q150,000.00
Common stock Q 100,000.00
Paid-in surplus Q 50,000.00
To register 1,000 ordinary shares at
Q100.00 each sold at 50% more than their
price. Q150,000.00 Q150,000.00

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Exercise No. 7
1,000 common shares of Q100.00 each were placed at 10% below their par value.

Pda. No. 1
Cash and Banks Q 90,000.00
Paid-in surplus Q 10,000.00
Common stock Q 100,000.00
To register 1,000 ordinary shares at Q100.00
each sold at 10% discount Q 100,000.00 Q 100,000.00 Q 100,000.00

2.2. Shares repurchased or held in treasury

Common and preferred shares can be converted into treasury shares. They are so named because they are in circulation
and have been recovered by the company that issued them, in accordance with Article 11 of the Commercial Code. The
company may only acquire its own shares in the event of the exclusion or separation of a shareholder, provided that it has
profits or capital reserves only up to the total of such profits and reserves excluding the legal reserve.
If within 6 months the company has not achieved the sale or placement of these shares, the capital must be reduced in
accordance with the legal requirements. Shares repurchased or held in treasury may be originated by:
a. Buy
b. Donation
c. Payment of an obligation

FIRST CASE. Repurchase and cash sale

Exercise No. 8
The company Baby S. A. for its own interests, repurchases 15 common shares with a par value of Q200.00 each and
subsequently carries out the following transactions:
a. The shares are sold at the same value at which they were repurchased.
b. Sold with a total profit of Q300.00.
c. Sold at a 10% discount.

a) The shares are sold at the same value at which they were repurchased.
Pda. No. 1
Shares repurchased or held in treasury Q 3,000.00
Cash and Banks Q 3,000.00
Repurchase of 15 shares with a par value of Q200.00
each Q 3,000.00 Q 3,000.00
Pda. No. 2
Cash and Banks Q 3,000.00
Shares repurchased or held in treasury Q 3,000.00
Placement of 15 shares of common stock Q200.00 each Q 3,000.00 Q 3,000.00

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b) Sold at a total profit of Q300.00
Pda. No. 1
Shares repurchased or held in treasury
Cash and Banks Q 3,000.00 Q 3,000.00
Repurchase of 15 shares with a par value of Q200.00
each Q 3,000.00 Q 3,000.00
Pda. No. 2
Cash and Banks
Q 3,300.00
Shares repurchased or held in treasury Q 3,000.00
Paid-in surplus Q 300.00
Placement of 15 shares of common stock Q200.00 each Q 3,300.00 Q 3,300.00

c) Sold at a 10% discount

Pda. No. 1
Shares repurchased or held in treasury Cash and banks Q 3,000.00 Q 3,000.00
Repurchase of 15 shares with a par value of Q200.00
each Q 3,000.00 Q 3,000.00
Pda. No. 2
Cash and Banks Q 2,700.00
Paid-in surplus Q 300.00
Shares repurchased or held in treasury Q 3,000.00
Placement of 15 shares of common stock Q200.00 each Q 3,000.00 Q 3,000.00

2.3. Carrying value of common and preferred stock

Pursuant to the articles of incorporation, the shares of a corporation may be common and preferred and the determination
of the book value of a share is based on the going concern principle. The term "value" should not be confused with
"price".

If we were to calculate the book value of a company with only one type of share it would be:
Book Value = Stockholders' Equity
Number of Shares
But when two types of shares are involved, the degree of participation of each type of share and the stipulations agreed in
the articles of incorporation regarding the participation in the dividends must be separated.

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Exercise No. 9
The financial manager of the company "El paisano, S.. A. requests your professional services to determine the book value
of the 7% preferred and common shares with a par value of Q150.00 each. And for this purpose you have the following
information:
Legal Reserve Q 11,000.00
Contingency reserve Q 10,500.00
Paid-in surplus Q 6,500.00
Earned Surplus Q 9,700.00
Undistributed earnings Q 29,000.00 Q 66,700.00
1,700 issued and paid 7% preferred shares Q 255,000.00
3,100 shares of common stock issued and paid up Q 465,000.00 Q 720,000.00
3,200 shares of 7% preferred stock authorized Q 480,000.00
6,100 shares of authorized common stock Q 915,000.00 Q1,395,000.00
Common shares held in treasury Q 15,000.00
Treasury preferred shares at 7%. Q 30,000.00 Q 45,000.00
With the above information you should prepare the following:
a. Number of common and preferred shares outstanding.
b. Value inbooksfromthe shares without participation and without delay.
c. Value inbooksfromthe shares without participation and three years behind schedule.
d. Value inbooksfromthe shares with full participation and without delay.
e. Value inbooksfromthe shares with full participation and with three yearsfrom delay.

a) Determination of the number of shares outstanding

Concept Common Stock Preferred Stock Total

(-) Authorized (Value Q150.00 each) 6100 3200 9300

(-) Not subscribed 3000 1500 4500
Subscribed 3100 1700 4800
(-) Not Paid 0 0 0
Paid 3100 1700 4800
(-) Treasury Stock 100 200 300
Shares in Circulation 3000 1500 4500
Value per share Q 150.00 Q 150.00
Nominal Value Q 450,000.00 Q 225,000.00
b) Book value of shares without participation and without delay
Surplus and Reserves Q 66,700.00
(-) Fixed preferred stock dividend: 1500 preferred shares at
Q150.00 each.
Q225,000.00 *7%*1 year Q 15,750.00
Dividend for common stock Q 50,950.00

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 c) Book value of shares without participation and with three years of delay
Surplus and Reserves Q 66,700.00
(-) Fixed preferred stock dividend: 1500 preferred shares at
Q150.00 each.
Q225,000.00 *7%*3 years Q 47,250.00
Dividend for common stock Q 19,450.00
d) Book value of shares with participation and without delay
Q 66,700.00
(-) Surplus and Reserves
Fixed preferred stock dividend: 1,500 preferred shares at
Q150.00 each Q225,000.00 *7%*1 year Q 15,750.00
Dividend for common stock Q 50,950.00

Ordinary and preferred dividend Dividend for common shares

Q50,950.00*3,000/4,500= Q50,950.00*3,000/4,500=
Q50,950.00*3,000/4,500.00 Q 33,966.67
Preferred stock dividend Q50,950.00*1,500/4,500=
Q50,950.00*1,500/4,500= Q50,950.00*1,500/4,500.00 Q 16,983.33
— Q 50,950.00
e) Book value of shares with participation and three years of delay
Surplus and Reserves Q 66,700.00
(-) Fixed preferred stock dividend: 1500 preferred shares at
Q150.00 each.
Q225,000.00 *7%*3 years Q 47,250.00
Dividend for common stock Q 19,450.00

Common and preferred dividend Dividend for common

shares Q19,450.00*3,000/4,500= Q19,450.00*3,000/4,500=
Q19,450.00*3,000/4,500.00
Preferred stock dividend Q19,450.00*1,500/4,500=
Q19,450.00*1,500/4,500= Q19,450.00*1,500/4,500.00
CASE I
No participation and no delay
Q 12,966.67
Q 6,483.33
Q 19,450.00
CASE II CASE III CASE IV
No participation and two years behind With participation and two years behind
schedule With participation and without delay schedule

CONCEPT Common Stock Preferred Stock Common Stock Preferred Stock Common Stock Preferred Stock Common Stock Preferred Stock

a) Nominal Value Q 450,000.00 Q 225,000.00 Q 450,000.00 Q 225,000.00 Q 450,000.00 Q 225,000.00 Q 450,000.00 Q 225,000.00
b) Preferred Fixed
Dividend Q 15,750.00 Q 47,250.00 Q 15,750.00 Q 47,250.00

c) Ordinary and
Preferred Dividend Q 50,950.00 Q 19,450.00 Q 33,966.67 Q 16,983.33 Q 12,966.67 Q 6,483.33

Stockholders' equity Q 500,950.00 Q 240,750.00 Q 469,450.00 Q 272,250.00 Q 483,966.67 Q 257,733.33 Q 462,966.67 Q 278,733.33

Capital stock 3,000 1,500 3,000 1,500 3,000 1,500 3,000 1,500

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Value per Share 166.98 160.50 156.48 181.50 161.32 171.82 154.32 185.82

2.4. Termination of shares due to default

In accordance with article 110 of the commercial code, when a shareholder does not pay at the agreed times the value of
his share, the company may at its option:
1. Sell at the risk and expense of the defaulting shareholder the shares corresponding to him/her and with the proceeds
thereof cover the resulting liabilities and the remaining balance will be delivered to him/her.
2º To reduce the shares to the amount that is fully paid with the deliveries made; the others will be invalidated, except as
provided for in the corporate deed.
3º Proceed to the collection of the pending appeals in the executive process, constituting executive title the notarial act of
the accounting records, where the existence of the obligation is recorded; in said act the documents and resolutions
pertinent to the term of the obligation will be transcribed.

a. Shares are issued in favor of the insolvent shareholder for the balance in its favor and if there is any remainder,
it is paid in cash.
Exercise No. 10
In the company Miraflores S. A., on July 1, 2017, Mr. Javier Santizo subscribed 10 common shares and 15 preferred
shares at 10% of Q100.00 each.
On the same date, 40% of the common shares and 50% of the preferred shares were cancelled in cash. According to the
agreement with the company, Mr. Santizo would have to pay the outstanding balance on the two types of shares
subscribed on November 30. However, I only cancel the balance of the common stock.
On December 1, 2017, it was decided at a General Meeting to rescind the preferred shares, due to non-payment.
The new placement of these rescinded shares took place on January 1, 2017, under the following conditions:
a. Preferred shares were placed again at 10%, obtaining for them the amount of Q1,300.00.
b. The expenses incurred for the new placement amounted to Q75.00.
c. Mr. Santizo's reinstatement was made as follows:
•
4 preferred shares were delivered
•
For the remainder, a check will be issued
You are requested to prepare the corresponding accounting items.

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Pda. No. 1
Common stock Q 1,000.00
Preferred stock Q 1,500.00
Unissued common stock Q 1,000.00
Unissued preferred stock Q 1,500.00
For the subscription of 10 shares of common stock and
15preferred
shares ofshares at Q100.00 each. Q 2,500.00 Q 2,500.00
Pda. No. 2
Cash and Banks Q 1,150.00
Common stock Q 400.00
Preferred stock Q 750.00
For the payment of 40% of the common stock and 50%
ofof
thepreferred
commonstock
stock Q 1,150.00 Q 1,150.00
Pda. No. 3
Cash and Banks Q 600.00
Common stock Q 600.00
For the cancellation of 60% of the common stock Q 600.00 Q 600.00
Pda. No. 4
Preferred shares cancelled Q 1,500.00
Preferred stockholders Q 750.00
Sundry creditors Q 750.00
For the rescission of 50% of the preferred stock Q 1,500.00 Q 1,500.00
Pda. No. 5
Cash and Banks Q 1,300.00
Sundry creditors Q 200.00
Preferred shares cancelled Q 1,500.00
Value of the sale or placement of 15 shares
discounted preferred stock Q 1,500.00 Q 1,500.00
Pda. No. 6
Sundry creditors Q 75.00
Cash and Banks Q 75.00
Expenses to be borne by the defaulting member Q 75.00 Q 75.00
Pda. No. 7
Preferred stock Q 400.00
Unissued preferred stock Q 400.00
Subscription of 4 preferred shares Q 400.00 Q 400.00
Pda. No. 8
Sundry creditors Q 475.00
Preferred stock Q 400.00
Cash and Banks Q 75.00
Payment to the defaulting shareholder in shares and
cash Q 475.00 Q 475.00

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DIVIDEND ACCOUNTING OPERATIONS
Exercise No. 11
The stockholders' equity section of the balance sheet of "El Oasis, S.. A.", as of December 31, 2017, is as
follows:

EL OASIS, S.A.
Stockholders' equity section
as of December 31, 2017
(figures in quetzales)

Authorized Capital Q 1,625,000.00

Common stock Q
4000 250.00 each Q 1,000,000.00
Preferred stock 12% a
2500 Q 250.00 each Q 625,000.00
(with 2 years of delay and
full participation)
(-) Unissued shares Q 250,000.00
Common stock Q
500 250.00 each Q 125,000.00
Preferred stock 12% a
500 Q 250.00 each Q 125,000.00
Subscribed and paid-in capital Q 1,375,000.00
Common stock Q
3500 250.00 each Q 875,000.00
Preferred stock 12% a
2000 Q 250.00 each Q 500,000.00
(-) Treasury Stock Q 81,250.00
Common stock Q
200 250.00 each Q 50,000.00
Preferred stock 12% a
125 Q 250.00 each Q 31,250.00
Subscribed, paid-in and outstanding
capital Q 1,293,750.00
Surplus and Reserves Q 930,000.00
Undistributed earnings Q 725,000.00
Legal Reserve Q 50,000.00
Reserve for labor contingencies Q 125,000.00
Surplus paid Q 30,000.00
Stockholders' equity Q 2,223,750.00

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The following is requested
a. To carry out the necessary operations as a consequence of the dividend declaration made by "El
Oasis, S. A. de C. V.". A." on subscribed, paid-in and outstanding capital, in addition to the
preferred dividend. Common dividends for common preferred stock are paid in cash and the
preferred dividend is partially paid with all preferred stock in available treasury and new shares
are issued for the remainder.
b. Prepare the stockholders' equity section after dividends have been paid.

Determination of outstanding shares

Ordinary Preferred Total
3,500 2,000 5,500
Shares subscribed paid 200 125 325
(-) Shares held in treasury
3,300 1,875 5,175

Calculation of Dividend to be paid

Ordinary preferred total
1 Preferred dividend
1875 x Q 250.00 x 12% x 2 Q 112,500.00 Q 112,500.00
Dividend
2 ordinary
a Preferred stock
1875 x Q 250.00 x 12%.
Q 56,250.00 Q 56,250.00

b Ordinary shares 3300 x Q

Q 99,000.00 Q 99,000.00
250.00 x 12%.

Total dividend declared Q 99,000.00 Q 168,750.00 Q 267,750.00

Form of payment
Cash Ordinary dividend Q 155,250.00

Treasury stock Q 31,250.00

125 shares of Q 250.00 ea.

New shares Q 81,250.00

325 shares pref. From Q 250.00 each
Q 267,750.00

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Journal
P1
31/12/2017 Q 267,750.00
Undistributed earnings Dividends payable Q267,750.00
Q 267,750.00 Q 267,750.00
P2 31/12/2017
Preferred stockholders Q 81,250.00
Unissued preferred stock Q 81,250.00
Q 81,250.00 Q 81,250.00
P3 31/12/2017
Dividends payable Q 267,750.00
Cash and Banks Q155,250.00
Treasury stock Q 31,250.00
Preferred stockholders Q 81,250.00
Q 267,750.00 Q267,750.00

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