1. In preparing Levi Inc.

’s statement of cash flows for the year ended December 31, 2020, the
following amounts were available:
Collect note receivable 320,000
Issue bonds payable 406,000
Purchase treasury shares 210,000
What amount should be reported on Levi, Inc’s statement of cash flows for financing activities?
a. 86,000
b. 726,000
c. 196,000
d. 110,000

2. Hagibis, Inc. reported net income of 34,000 for the year ended December 31, 2021. Included in
net income was a gain on early extinguishment of debt of 60,000 related to bonds payable with a
book value of 1,200,000. Each of the following accounts increased during 2021:
Notes receivable 45,000
Deferred tax liability 10,000
Treasury shares 90,000
What is the amount of cash used by financing activities for Hagibis, Inc. for the year ended
December 31, 2021?
a. 1,230,000
b. 1,240,000
c. 160,000
d. 195,000

3. Selected information from Deepwell Company's 2020 accounting records is as follows:

Proceeds from issuance of ordinary shares 400,000
Proceeds from issuance of bonds 1,200,000
Cash dividends on ordinary shares paid 160,000
Cash dividends on preference shares paid 60,000
Purchase of treasury shares 120,000
Sale of ordinary shares to officers and employees not included above 100,000
Deepwell statement of cash flows for the year ended December 31, 2020, would show net cash
provided (used) by financing activities of
a. 60,000
b. (220,000)
c. 160,000
d. 1,360,000

4. Panier Co. provided the following information on selected transactions during 2020:
Purchase of land by issuing bonds 250,000
Proceeds from issuing bonds 500,000
Purchases of inventory 950,000
Purchases of treasury shares 150,000
Loans made to affiliated corporations 350,000
Dividends paid to preference shareholders 100,000
Proceeds from issuing preference share 400,000
 Proceeds from sale of equipment 50,000
The net cash provided by financing activities during 2020 is
a. 550,000
b. 650,000
c. 800,000
d. 900,000

5. Flamingo Company provided the following information on selected transactions during 2021:
Dividends paid to preference shareholders 150,000
Loans made to affiliated corporations 750,000
Proceeds from issuing bonds 900,000
Proceeds from issuing preference shares 1,050,000
Proceeds from sale of equipment 450,000
Purchases of inventories 1,200,000
Purchase of land by issuing bonds 300,000
Purchases of treasury shares 600,000
The net cash provided (used) by financing activities during 2021 is
a. (1,650,000)
b. 450,000
c. 750,000
d. 1,200,000

6. The ending Retained Earnings balance of Lamberto Inc. increased by 1.5 million from the
beginning of the year. The company's net income earned during the year is 3.5 million. What is
the amount of dividends Lamberto Inc. declared and paid?
a. 1.5 million
b. 3.5 million
c. 2.0 million
d. 5.0 million

7. Clothing Co. was organized on January 1, 2020. The firm was authorized to issue 100,000 shares
of P5 par value common stock. During 2020, Clothing Co. had the following transactions relating
to shareholders' equity:
Issued 30,000 shares of common stock at P7 per share.
Issued 20,000 shares of common stock at P8 per share.
Reported a net income of 100,000.
Paid dividends of 50,000.
What is the total stockholders' equity at the end of 2020?
a. 420,000
b. 370,000
c. 470,000
d. 250,000

8. Presented below is the stockholders' equity section of OK Corporation at December 31, 2021:
Common stock, par value P20; authorized 75,000 shares;
 issued and outstanding 45,000 shares 900,000
Paid-in capital in excess of par value 250,000
Retained earnings 300,000
1,450,000
During 2022, the following transactions occurred relating to stockholders' equity:
3,000 shares were reacquired at P28 per share.
3,000 shares were reacquired at P35 per share.
1,800 shares of treasury stock were sold at P30 per share.
For the year ended December 31, 2022, OK reported net income of 450,000. Assuming OK
accounts for treasury stock under the cost method, what should it report as total stockholders'
equity on its December 31, 2022, balance sheet?
a. 1,765,000
b. 1,761,400
c. 1,757,800
d. 1,315,000

9. Wing Corporation owned 300,000 shares of Vegan Corporation stock. On December 31, 2020,
when Wing’s account "Equity Investment (Vegan Corporation") had a carrying value of P5 per
share, Wing distributed these shares to its stockholders as a dividend. Wing originally paid P8 for
each share. Vegan has 1,000,000 shares issued and outstanding, which are traded on a national
stock exchange. The quoted market price for a Vegan share was P7 on the declaration date and P9
on the distribution date.

What would be the reduction in Wing’s stockholders' equity as a result of the above transactions?
a. 1,200,000
b. 1,500,000
c. 2,400,000
d. 2,700,000

10. Masters Company has 420,000 shares of P10 par value common stock outstanding. During the
year Masters declared a 10% stock dividend when the market price of the stock was P36 per share.
Three months later Masterson declared a P.60 per share cash dividend. As a result of the dividends
declared during the year, retained earnings decreased by
a. 1,789,200
b. 1,512,000
c. 277,200
d. 264,000

11. On December 31, 2019, XY company had a net income of 280,000. At the begging of the year,
the company sold a machinery for 104, 000 with an amortized cost of 80, 000 for 40, 000 cash.
Before the year ends, XY company paid a cash dividend of 36,000. What will be the effect of the
following on the cash flows for financing activities?
a. Outflow of 24,000
b. Inflow of 16,000
c. Inflow of 18,000
d. Outflow of 36,000
12. What should be reported in J-lo’s statement of cash flows for financing activities given the
following transactions:
Loans made to affiliated corporations 500,000
Issued bonds payable 406,000
Proceeds from sale of equipment 15,000
Purchased treasury shares 210,000
Cash dividends paid 115, 000
a. Inflow of 421, 000 and Outflow of 825,000
b. Inflow of 406, 000 and Outflow of 210,000
c. Outflow of 325,000 and Inflow of 406,000
d. Outflow of 175, 000 and Inflow of 15,000

13. The following information were seen at the accounting records of BLK company:
Sale of ordinary shares to employees 150,000
Cash dividends paid on ordinary shares 80,000
Cash dividends paid on preference shares 250,000
Proceeds from issuance of ordinary shares 340,000
Proceeds from issuance of preference shares 50,000
Sale of preference shares to officers 25,000
Purchase of treasury stocks 10,000
Based on the information above, what is the cash used for financing activities of BLK company
on the December 31, 2020?
a. 340,000
b. 390,000
c. 565,000
d. 50,000

14. If Global Corporation has the following items: Share capital-Ordinary 500,000; Share
premium- Ordinary 50,000; Accumulated earnings 375, 000 and Treasury shares 60,000. What
amount should the Global Corporation must report as shareholder’s equity?
a. 815,000
b. 865,000
c. 985,000
d. 935,000

15. DBTK Inc. has a retained earnings of 375,000. If the board of directors of the company
declared cash dividends of 115,000 and the dividends payable was 54,000 at the beginning of the
year and 27, 000 at the end of the year. What will be the new retained earnings after deducting the
cash paid in dividends during the year?
a. 517,000
b. 490,000
c. 233,000
d. 294,000
16. Jahaziel Company reported net assets totaling 9,750,000 at year-end which included the
following:
Treasury shares of Jahaziel Company at cost 350,000
Idle machinery 200,000
Trademark 250,000
Allowance for inventory write-down 300,000

What amount should be reported as net assets at year-end?

a. 550,000
b. 9,400,000
c. 7,400,000
d. 9,450,000

17. Starlight Company provided the following information at year-end:

Share premium 2,000,000
Accounts payable 2,100,000
Preference share capital, at par 3,000,000
Ordinary share capital, at par 4,000,000
Sales 11,000,000
Total expenses 8,800,000
Treasury shares at cost – ordinary 600,000
Dividends 800,000
Retained earnings – beginning 2,000,000

What total shareholder’s equity should be reported at year-end?

a. 11,800,000
b. 2,200,000
c. 3,400,000
d. 10,400,000

18. Blank Space Company provided the following information at year-end:

Share capital 16,000,000
Share premium 6,000,000
Treasury shares, at cost 3,000,000
Actuarial loss on defined benefit plan 2,000,000
Retained earnings unappropriated 7,000,000
Retained earnings appropriated 4,000,000
Revaluation surplus 5,000,000
Cumulative translation adjustment – credit 2,500,000

What amount should be reported as total shareholder’s equity?

a. 38,500,000
b. 26,500,000
c. 35,500,000
d. 24,500,000
19. 22 Company provided the following current assets and shareholder’s equity at year-end:
Cash 700,000
Financial assets at fair value through profit or 2,000,000
loss, including cost of P400,000 of Taylor
Swift Company shares
Accounts receivable 4,500,000
Inventory 2,500,000
Total current assets 9,700,000
Share capital 6,000,000
Share premium 3,000,000
Retained earnings 600,000
Total shareholder’s equity 6,900,000

What amount should be reported as total shareholder’s equity?

a.10,200,000
b. 9,000,000
c. 8,000,000
d. 9,200,000

20. Cornelia Company disclosed the following information:

Accounts payable, after deducting debit 5,000,000
balances in supplier’s accounts amounting to
200,000
Accrued expenses 2,500,000
Credit balances of customer’s accounts 600,000
Share dividend payable 2,000,000
Claims for increase in wages and allowance 500,000
by employees of the entity, covered in
pending lawsuit
Estimated expenses in redeeming prize 700,000
coupons

What amount should be reported as total current liabilities?

a. 7,700,000
b. 8,000,000
c. 9,000,000
d. 9,700,000

21. During 2020, SoShi Inc. had the following activities related to its financial operations:
Carrying value of convertible preference shares in SoShi,
converted into ordinary shares of SoShi 530,000
Payment in 2020 of cash dividend declared in 2010 to
preference shareholders 247,000
Payment for the early retirement of long-term bonds payable
(carrying amount 5,750,000) 5,800,000
Proceeds from the sale of treasury shares (on books at cost of 356,000) 400,000
The amount of net cash used in financing activities to appear in SoShi’s statement of cash flows
for 2020 should be
a. 633,000
b. 783,000
c. 5,153,000
d. 5,647,000

22. During the current year, OEIE Company had the following activities related to financial
operations:
Payment for the early extinguishment of long-term
bonds payable with carrying amount of 9,800,000 10,250,000
Payment in the current year of cash dividend declared
in prior year 840,000
Carrying amount of convertible preference shares
converted into ordinary shares 2,630,000
Proceeds from sale of treasury shares with carrying
amount at cost 950,000 1,040,000
In the statement of cash flows for the current year, what amount should be reported as net cash
used in financing activities?
a. 10,050,000
b. 3,830,000
c. 8,370,000
d. 9,500,000

23. SuJu Company provided the following data for the current year:
Gain on sale of equipment 260,000
Proceeds from sale of equipment 350,000
Purchase of bond investment with face amount of 2,000,000 2,600,000
Amortization of bond discount 280,000
Dividend declared 5,900,000
Dividend paid 5,200,000
Proceeds from sale of treasury share costing 650,000 820,000
What is the net cash used by financing activities?
a. 10,280,000
b. 5,080,000
c. 4,380,000
d. 10,000,000

24. BTS Company provided the following data at year-end:

Authorized share capital 6,000,000
Unissued share capital 3,000,000
Subscribed share capital 2,000,000
Subscription receivable 400,000
Share premium 600,000
Retained earnings unappropriated 900,000
Retained earnings appropriated 700,000
 Revaluation surplus 300,000
Treasury share, at cost 200,000
What total amount should be reported as shareholders’ equity?
a. 5,900,000
b. 6,900,000
c. 1,900,000
d. 4,900,000

25. Oh!GG Company provided the following information at year-end:

Preference share capital, P100 par 5,000,000
Share premium- preference share 1,000,000
Ordinary share capital, P10 par 8,000,000
Share premium- ordinary share 4,000,000
Subscribed ordinary share capital 6,000,000
Retained earnings 8,500,000
Subscription receivable- ordinary share 2,000,000
What is the amount of legal capital?
a. 15,000,000
b. 19,000,000
c. 18,500,000
d. 10,000,000

26. During the current year, Bet Company had the following activities related to its financial
operations:
Payment for the early retirement of long term bonds
payable (carrying amount 7,400,000) 7,500,000
Distribution in the current year cash dividend declared
in prior year to preference shareholders 620,000
Carrying amount of convertible preference shares
converted into ordinary shares 1,200,000
Proceeds from sale of treasury shares (carrying amount
at cost, 860,000) 950,000
In the statement of cash flows for the current year, what amount should be reported as net cash
used in financing activities?
a. 7,170,000
b. 7,160,000
c. 5,970,000
d. 5,350,000

27. Una Company provided the following balances on December 31, 2019:
Ordinary share capital 5,000,000
Dividends- ordinary share 1,000,000
Dividends- preference share 500,000
Share premium 500,000
Preference share capital 3,000,000
Retained earnings 5,000,000
What is the total shareholder’s equity on December 31, 2019?
a. 15,000,000
b. 13,500,000
c. 9,500,000
d. 8,500,000

28. Gray Co. has current assets of 50,000 and total assets of 150,000. Gray has current liabilities
of 30,000 and total liabilities of 80,000. What is the amount of Gray’s owner’s equity?
a. 20,000
b. 30,000
c. 70,000
d. 120,000

29. A company reports the following on its balance sheet:

Cash 10,000
Accounts Receivable 20,000
Short Term Notes 7,000
Long Term Notes 10,000
Capital Stock 40,000
Retained Earnings 12,000
What are the company’s total equity?
a. 40,000
b. 12,000
c. 52,000
d. 69,000

30. Yuwan Company prepared its statement of cash flows for the current year and collected the
following data:
Proceeds from sale of equipment 100,000
Dividend declared 450,000
Dividend paid 380,000
Proceeds from sale of treasury shares
(carrying amount, P650,000) 750,000
What amount should be reported as net cash provided by financing activities?
a. 200,000
b. 270,000
c. 300,000
d. 370,000

31. If a company issues 1 million P1 shares at P1.30 per share, what will be the effect on the
statement of cash flows?
a. Cash flows from financing activities will increase by 300,000
b. Cash flows from investing activities will increase by 300,000
c. Cash flows from investing activities will increase by 1,000,000
d. Cash flows from financing activities will increase by 1,000,000
32. If Xan Company issues 2 million P1.50 shares at P1.00 per share, what will be the effect on
the statement of cash flows?
a. Cash flows from financing activities will decrease by 500,000
b. Cash flows from investing activities will decrease by 500,000
c. Cash flows from investing activities will decrease by 1,000,000
d. Cash flows from financing activities will decrease by 1,000,000

33. B Company Paid interest with cash 1,000, paid Cash dividends of 4,500, sold ordinary stock
for cash at 120,000 and sold bonds for cash at 8,000. B Company also repurchased stocks
(treasury stock) at 36,000. What amount will be reported as the net cash inflow from financing
activities?
a. 85,000
b. 156,000
c. 158,500
d. 168,500

34. A firm reported 130 million increase in cash over a year. It also reported 400 million in cash
flow from operations, and a net 75 million paid out to claimants in financing activities. How
much did the firm invest in operations?
a. 195,000,000
b. 200,000,000
c. 215,000,000
d. 185,000,000

35. In preparing Nike Inc.’s statement of cash flows for the year ended December 31, 2016, what
amount should be reported on Nike Inc.’s statement of cash flows for financing activities if these
were the amounts available:
Accounts receivable 500,000
Bonds payable 319,000
Treasury shares 103,000
a. 181,000
b. 426,000
c. 312,000
d. 213,000

36. Sarah Company reported bonds payable of 4,700,000 on December 31, 2019 and 5,000,000
on December 31, 2020. During 2020, the entity issued 2,000,000 of bonds payable in exchange
for equipment. There was no amortization of premium or discount during the year. What is the
payment for redemption of bonds payable?
a. 300,000
b. 1,700,000
c. 2,000,000
d. 2,300,000

37. Hania Company provided the following data for the current year.
 Gain on sale of equipment 60,000
Proceeds from sale of equipment 100,000
Purchase of Ace bonds, face amount, P2,000,000 1,800,000
Amortization of bond discount 20,000
Dividend declared 450,000
Dividend paid 380,000
Proceeds from sale of treasury shares with
carrying amount of P650,000 750,000
What is net cash provided by financing activities?
a. 200,000
b. 270,000
c. 300,000
d. 370,000

For Numbers 38 and 39

On January 1, 2019, the shareholder's equity section of Wandee, Inc.'s statement of
financial position disclosed the following information:
12.5% convertible preference share
(40 par value share authorized, 60,000 share
issued and outstanding) 2,400,000
Ordinary Shares (5 par value, 600,000 shares authorized) 1,800,000
Share premium 9,000,000
Retained Earnings 13,500,000
Total shareholder's equity 26,700,000

The following equity transactions occurred during 2019 and 2020:

 On Feb. 2, 2019, 45,000 ordinary shares were acquired by the company for P33 par
value.
 On Sept. 30, 2019, 15,000 preference shares were converted into ordinary share. One
convertible preference share is equal to one ordinary share. At time of conversion, the
ordinary share had a market value of 42 par value.
 On Dec. 21, 2019, the company placed a share subscription of 30,000 ordinary shares at a
subscription price of 33 per share. The subscription contract requires the subscriber to
forfeit all cash advances.
 On Feb. 1, 2020, 25,500 ordinary share were issued according to the subscription
contract. Because of default of the subscriber, 4,500 shares weren't issued. The
subscription contract requires the subscriber to forfeit all cash advances.
 On April 15, 2020, 30,000 shares held as treasury were reissued at 50 per share.
 On May 16, 2020, a special dividend of preference share was distributed to ordinary
shareholders. One hundred ordinary shares entitled a shareholder to a one preference
share. The market price of preference share was 40 per share at that time.
 Cash dividends are declared for preference and ordinary shares on October 31 and April
30 of each year. Semiannual cash dividends for ordinary share are .5 per share.

Wandee, Inc. reported net income of 1,980,000 in 2019 and 2,670,000 in 2020. What are the
balances of the following accounts on December 31, 2020:
38. Retained Earnings
a. 17,665,000
b. 17,098,400
c. 16,944,862
d. 16,790,662

39. Preference and Ordinary Share

a. 1,954,200 and 2,002,500
b. 1,800,000 and 2,002,500
c. 1,954,200 and 1,875,000
d. 1,800,000 and 1,875,000

40. Ocean Company provided the following information:

2021 2020
Share Capital 5,000,000 4,800,000
Retained Earnings 3,000,000 2,500,000
Dividends Payable 1,200,000 1,800,000
Net Income 2,000,000
What amount was paid for dividends in 2021?
a. 2,100,000
b. 1,500,000
c. 1,900,000
d. 2,600,000

41. The following transactions were made by Ek Ang Co. during the year 2019:
Purchased Treasury Shares 35,000
Paid Accounts Payable 585,000
Notes Receivable collected 50,000
Dividends paid 190,000
Issued bonds payable 340,000
Issued common stock 175,000
What is the net cash provided (used) by financing activities to be reported on the statement of
cash flows of Ek Ang Co.?
a. 325,000
b. 290,000
c. 115,000
d. 515,000

42. Calculate the ending balance in Retained Earnings of VEV Co. for the year ended December
31,2020:
Retained Earnings, Beginning 10,000
Net Income 5,000
Dividends paid 4,000
a. 19,000
b. 15,000
c. 11,000
d, 1,000

43. At the beginning of the current year, 3JP Company was authorized to issue 100,000 shares
with P50 par value. During the current year, the entity had the following transactions relating to
shareholder’s equity:
Issued 10,000 shares at P70 per share
Issued 20,000 shares at P80 per share
Reported Net Income of 1,000,000
Paid dividends of 200,000
Purchased 3,000 Treasury Shares at P100 per share
What is the total shareholder’s equity at year-end?
a. 2,300,000
b. 2,800,000
c. 1,500,000
d. 800,000

The Fairy Tail Company

Equity Section of Balance Sheet
For the Year Ending December 31, 2003

Common stock (Php. 0.50 par value) Php. 10,000,000

Additional paid-in capital 44,000,000
Retained earnings 32,000,000
Total Shareholders’ Equity Php. 86,000,000

44. Based on the above information, what is the total amount of money raised by the Fairy Tail
Company from the sale of all of its stock through time?
a. Php. 44,000,000 b. Php. 86,000,000
c. Php. 37,000,000 d. Php. 54,000,000

For items 2 – 3 the following information is available for 2017.

1. Treasury stock was purchased at a cost of Php. 13,200.
2. Cash dividends of Php. 36,000 were declared and paid.
3. A long-term investment in stock was purchased for Php. 19,200.
4. Depreciation expense was Php. 4,800 on the building and Php. 10,800 on equipment.
5. Net income was Php. 66,000.
6. Bonds payable of Php. 60,000 were issued.
7. An addition to the building was completed at a cost of Php. 32,400.
8. Patent amortization was Php. 3,000.
 9. Equipment (cost Php. 24,000 and accumulated depreciation Php. 9,600) was sold for
Php. 12,000.

45. Using the information above compute for the total stockholders’ equity.
a. Php. 285, 600 b. Php. 365, 400
c. Php. 360,000 d. Php. 76,800

46. Based on the information given in number 2, what is the total cash flow provided (used) by
financing?
a. Php. 12,600 b. Php. 13,200
c. Php. 10,800 d. none of the above

47. Erza Scarlet, Inc. engaged in the following cash transactions during 2017.
Sale of land and building Php. 191,000
Purchase of treasury stock Php. 40,000
Purchase of land Php. 37,000
Payment of cash dividend Php. 95,000
Purchase of equipment Php. 53,000
Issuance of common stock Php. 147,000

Compute the net cash provided (used) by investing activities.

a. Php. 10,000 b. Php. 12,000
c. Php. 7,000 d. Php. 9,500

48. Kingsley Company’s adjusted trial balance at December 31, 2014 includes the following
account balances:
Ordinary Share Capital, Php. 3 par Php. 3,000,000
Subscription Receivable due 2015 300,000
Share Premium 4,000,000
Treasury shares at cost 250,000
Net unrealizable loss on equity securities, net 100,000
Reserved for uninsured earthquake losses 750,000
Accumulated profits 1,000,000
Ordinary shares subscribed 500,000
Reserve for treasury shares 250,000

What amount should Kingsley Company report as total shareholders’ equity in its December 31,

2014 statement of financial position?

a. Php. 8,400,000 b. Php. 8,900,000

c. Php. 9,150,000 d. Php. 9,200,000