io ed Premiums payable gst ium on preference shares hare rized preference shares at P50 par value atte ‘ale of treasury shares Galt pd increase in Value of FVTOCI securities ued Ty share warrants outstanding ordinteg ordinary shares united preference shares ustsvidends payable - preferences capital me forbond sinking fund serve for depreciation uation surplus Subscription receivable ~ preference sipeription receivable - ordinary shares ordinary shares options outstanding sjecumulated profits ~ unappropriated ‘Bonds payable subscribed Ordinary shares ong term investments in equity securities share premium on ordinary shares premium on bonds payable share Premium conversion option-bonds payable Authorized ordinary shares at P10 stated value subscribed preference shares Treasury shares-ordinary shares (10,000 shares) (questions: Tused on the above data, compute for the following: 1. Ordinary share issued a 1,100,000 c. 2,400,000 b. P1,300,000 d. P2,800,000 2. Preference shares issued a 300,000 c. 71,600,000 b. P1,300,000 d. P1,720,000 3 Share premium : P1,100,000 c. 1,250,000 » P1,170,000 d. P1,300,000 1394 200,000 300,000 1,600,000 120,000 20,000 70,000 1,300,000 300,000 160,000 80,000 640,000 200,000 260,000 30,000 40,000 50,000 1,000,000 2,000,000 400,000 800,000 600,000 200,000 80,000 2,400,000 120,000 150,000} arenolders” equity _—— ja share & 1 . P1,460,000 a 1 capital . PAG 4 contrib 000 d, P2,075,000 i ae i 3,520,000 tal c. P3,520, ‘otal legal CaP" : 5 TO 950,000 d. P3,820,000 * 97920000 ‘ equity P5,920,000 h reholders et om 7 . To 70000 d. P6,070,000 00 b. 14940.0 : for Cash Consideration, Share 2 issuance of shares fe re PROBLEM a a iesuances of P50 paz value shares of stock: oy Assam ance of 000 sie at rae share for cash. Stock issue cost i: 7 5,000 share’ ; at 7 Issuance of poration amounted to P7000. , 7 paid by tm i p40 per share for cash. Issuance ‘of 4,000 shares ie sactions listed above in journal entry form, 3 Required: Record the tran ince of Shares for Noncash Consideration ing 50 par value shares of stock: following issuances of P50 pat eg 2300 ving oof stack for machinery. The machinery has farvahey * 160,000 while the stock is selling at 965 per share. 2, Issued 1,000 shares of stock for patent (an intangible asset). The sto, selling at P6S per share. — Issued 400 shares of stock in full payment of organization services render 3. from the legal counsel. The fair value of such services is P40,000. PROBLEM 32-3 Issual Required: Record the transactions listed above in journal entry form, PROBLEM 32-4 Issuance of Shares for Outstanding Liability } The company issued 2,000, P50 par ordinary shares for an outstanding banklia ofP150,000. On this date, shares are quoted at P70 per share. Required: Record the transactions listed above in journal entry form. PROBLEM 32-5 Issuance of Two Classes of Shares - Shares are Iss Separately The company issued the following sh: L a2! ig hares of stock: 2 sued $00 Poe value preference share, for P216 per share ores / *100 par value ordinary share, for P120 per share for ¢ Required: q Record the transactions listed above in journal entry form. PROBLEM 32-6 1, ump St il Method - rtional Methane of Two Classes of Shares - Increme pie company issued for p990 a Preference shareand 500 shares yey cast”, 2500 shares of ®200 Pi ue fi ceo ofP100 par ordinary share. The prefer 1395p Shareholders’ Equity ptt vind ss Ge shares have fair values of P216 and P120 per share, respectively on the ordi sale. a e o aired: Record the transactions listed above in journal entry form. 4! *sLem 32-7 Lump Sum Issuance of Two Classes of Shares - Incremental id , ether npany issued for P900,000 cash, 2,500 shares of P200 par value The ence share and 500 shares of P100 par ordinary share. ‘The preference e mee asa fair value of P216 on the date of sale. No fair value available for the shal seinary Share gequired: Record the transactions listed above in journal entry form. oBLEM 32-8 Subscriptions ‘ad subscribed for 7,500, PSO par ordinary shares of NCPAR corporation at p70 per share. AA paid 30% of the subscriptions price, 3) AA paid the remaining balance, gequired: Record the transactions listed above in journal entry form. PR 0 pROBLEM 32-9 Delinquent Subscriptions, Downpayment is Forfeited BB subscribed for 7,500, PSO par ordinary shares of NCPAR Corporation at 70 per share, 2) BB paid 30% of the subscriptions price. 3) Subsequently, BB was declared delinquent subscriber. In accordance with the subscriptions contract BB's downpayment was forfeited. Required: Record the transactions listed above in journal entry form. PROBLEM 32-10 Delinquent Subscriptions, Down-payment is Not Forfeited with Highest Bidder 1) CC subscribed for 7,500, P50 par ordinary shares of NCPAR corporation at 70 per share. 2) CC paid 30% of the subscriptions price. 3) Subsequently, CC was declared delinquent subscriber. The delinquent stocks are subsequently offered for public auction incurring a cost of 15,000. There are three bidders during the auction who are willing to pay the offer price corresponding to shares of stocks, as follows: # of shares willing to be Bidders received Dp 3,000 shares EE 3,500 shares FF 4,000 shares Required: Record the transactions listed above in journal entry form. 1396 MineChapter 32 - Shareholders’ Equity PROBLEM 32-11 Delinquent Subscriptions, Down-payment Is Not po, Without Highest Bidder Felteg Use the same PROBLEM 32-10 above, except that there are no bidders ang corporation purchased its own delinquent shares. the Required: Record the transactions listed above in journal entry form, PROBLEM 32-12 Treasury shares and Donated Capital ‘The Keep Walking Co, had 100,000 shares of ordinary share capital on Decem, 31, 2021. Its statement of financial position on that date showed the follgyat” shareholders’ equity balances: "8 Ordinary share capital, P20 par 2,000,009 Share Premium 600,000 1,200,009 Retained earnings The following treasury share transactions took place in 2021: 1) Purchased 15,000 ordinary shares at P24 per share. 2) Sold 5,000 of the treasury shares at P26 per share. 3) Sold 4,000 of the treasury shares at P20 per share. 4) Reissued 1,000 treasury shares for an equipment with a fair value of P25 9 The shares were selling at P35 per share. : 5) Retired the remaining treasury shares. 6) Astockholder donated 5,000 shares when the market price is P25 per share, Subsequently, the company sold 2,000 shares at P28 per share. 7) Astockholder donated Land to the corporation which costs him P100,000 five years ago but the land now has a fair value of P250,000. The corporation incurred 20,000 for registration and transfer of title. Required: Record the transactions listed above in journal entry form. PROBLEM 32-13 Retirement of Share Capital The Shareholders’ equity section of Flordie Co. on December 31 is as follows: Preference shares P100 par, 30,000 shares issued and outstanding 3,000,000 Share premium on preference shares 300,000 Ordinary share P50 par, 50,000 shares issued and outstanding _2,500,000 Share premium on ordinary shares 100,000 Accumulated profits 15,000,000 Required: Prepare the journal entry assuming 3,000 shares of the preferenceav® redeemed at: a 140 b. pos 1397 > |jg 32= Shareholders’ Eaujpy J 4 Conversion o ait opener en ders’ equity section ence Share fe rare cine | é 3 °°. On December 34 ows e share F100 par, 49 | ple * 50000 states Issted and [ ene remim On DTELENCe shag 3,000,000 é 5 sina) _ Fai 50,000 shares 'ssued and outst otra vepremitim on ordinary shee’ Standing 2,500,000 sor ted prt 15109000 5,000,000 required: journal entry assuming th the B that 4,0 Nah assumption listed: OO shares of preference are converted wun share are Convertibl i Preference sI . le into ord 2} Bach preference share is convertible into S san of ego share bass, €s of ordinary, PROBLEM 32-15 Recapitalizay por Value and Share Split the Shareholders’ equity section of Levana Co, ordinary share P40 par, 30,000 tion, Change from Par ‘0 No-Par, Reduction of on December 31, iss follows: shares issued and outstanding Share Premium on Ordinary shares 1,200,000 240,000 Accumulated Profits 20000000 Required: Assume the following inde Pendent cases; provide the that is made on the corporation books: 1} All the 30,000 ordinary shares are called in for cancellation. Instead, the company issued 30,000 no-par ordinary shares with the following stated value: a P30 . Arecapitalization is effected whereby the Par value of the ordinary shares is Teduced to P35 per share, The company effected a4 for 1 stock split on the ordinary shares, PROBLEM 32-16 She (Note: Use the say 4 On August 1 held by the journal entry z 3 are Rights Issued as a Right of Pre-Emption 'me shareholders’ equity of Levana Co. above) of the current year, Levana issued one stock right for each share shareholder to purchase two additional shares of stock for P42 October 31 of the same year, Tights were exercised when the market value Pershare, The rights expire on 2 On September 30, 15,000 stock. 2, Tyne tock was P45 per share, | The Requin Femaining rights expire on October 31. ed: Prepare all the necessary entries. 1398Chapter 32 ~ Shareholders’ Equity PROBLEM 32-17 Share Warrants - Different Cases The Patacsil Co. issued 2,000 shares of P50 par preference shares with detach warrants, The package sells for P200.’The warrants enable the holder to via 1,000 ordinary shares of P20 par at P40 per share. ae ance ofthe share, the warrants are sellin, f the preference without the warrants jg Case No. 1: If mmediately after the issu 7 P20 per share and the market value 0 0. Subsequently, 80% of the warrants is exercised. Case No, 2: Assume instead that only the market value of the preference without the warrants amounting to P80 is available. e warrants and the preference have no known Case No. 3: Assume instead that th 1g at PSO per share. market values but the ordinary share is tradin Required: Record the transactions listed above in journal entry form. PROBLEM 32-18 Cash Dividends On December 1 of the current year, Brayden Corp. declared PS per share dividends on the outstanding ordinary shares to the shareholders of record on jecember 15 payable on December 31. Brayden has 20,000 issued ordinary shares with par value of P100. These shares were issued on January 1 of the porrent yoatrOn February 1 of the current year, ths compe acquired 2,000 ordinary shares at cost of P110 per share which were held in treasury. Required: Prepare all the necessary entries atthe: 1) Date of Declaration 2), Date of Record 3) Date of Payment PROBLEM 32-19 Cash Dividends for Preference Shares-Semi-annual Payment On January 1, of the current year, Chinito issued 30,000, 10% preference shares to the public. The preference share has a par value of P20. On April 1 of the same Chinito reacquired 2,000 of its preference shares. On July 1, the Chinito paid mds, On October 1 of the same year, Chinito reissued 500 of 1731 of the current year, Chinito again year, its semi-annual divide its treasury preference shares. On Decembe! declared the semi-annual dividends of the preference shares. Required: Prepare all the necessary entries on the date of declaration of dividends. PROBLEM 32-20 Current Assets as Property Dividends vacad On November 1, 2021, Tolding Company declared inventory as proper’) heen is P550,000- payable on February 15,2022. The carrying amount ofthe inventory 'S Data relating to the fair values of the inventory are as follows: 1399ee, | shareholders’ E or 3 Fal values ¢ : —— ot nealuae {assume these are - raterially different with the on e realizable values) see 20, 500,000 wer 20 610,000 mea 1 P580,000 quit Record the transactions listed above in journal entry for te rm. ym 32-21 Property, Plant and Equipm / 0 ber 1 2021, Rhenz Company declaredag es roberty Dividends 22, TI fared equipment ri fa February 15, : as property dividend Uiyable 0” eid p ae he carrying amount of the equipment is £000. Data relating to the fair values of the equipment are as faite Fair value (assume that the heen Costs to distribute are immaterial) mt , . wc, rau wat 15,2022 580,000 required: Record the transactions listed above in journal entry form. Date pROBLEM 32- 22 Cash and Noncash Alternative oajenuary 1, 2021, Drenz Company had twenty outstanding ordinary shares. On peember 31, 2021, Drenz declared dividends on the ordinary shares. The cmporation decided to’ give the ordinary shareholders a choice between reciving a cash dividend of P9,000 per share or a property dividend in the form sfanon cash asset. Each noncash asset has a fair value of P9,200 and a carrying amount of 8,000. The corporation estimated that 55% of the ordinary shareholders will take the option of the cash dividend and 45% will elect for the noncash asset. Required: Prepare all the necessary entries on the: 1) Date of declaration of dividends. 1) Date of payment assuming the shareholders opted to avail of the 4 Cash dividends | b. Noncash dividends- the fair value of the noncash asset on the date of payment is 10,000. HOBLEM 32.23 Share Dividends: Small, Large and Treasury Shares * Shareholders’ equity section of Myna Ley Co on December 31 is as follows: qutaty share P40 par, 210,000 shares issued pee aad re Premium on ordinary shares “600,000 i Sury shares (10,000 shares) 10,000,000 ‘mulated profits al wired: . £ al eae: Assume the following independent cases, provide the journal entry le on the corporation books: 1400Chapter 32 - Shareholders’ Equity _ ‘ed 10% share dividends on the ordinary share y When thy 1) The company decla market value per share is P90. 2) The company declared 20% share dividends on the ordinary share market value per share is P90. When th, 3) A special dividend of preference share was distributed to oy4, J aeholders. One hundred shares of ordinary shares entitled a shargy™ to one share of P40 preference share. The market value of the prenteler share was P50 at that time. ference 4) The company declared and paid P10 per share liquidating dividends 5) Assume instead that the 10,000 treasury shares were declared and issu, as share dividends. PROBLEM 32-24 Fractional. ‘Share Rights The Sharcholders’ equity section of UMBRA Co on December 31, 2021 isas follows: Ordinary share P50 par, 100,000 shares issued and outstanding 5,009.99 Share premium on ordinary shares 1,000,000 Accumulated profits 10,000,000 On December 31, 2021, the company declared 30% share dividends to the shareholders of record January 15, 2022 payable on January 31, 2022. Assume that of the share dividends declared, 27,000 shares relate to full shares issued while 3,000 relate to the fractional shares issued. Also assume that 2,600 ofthe fractional shares were exercised at par while the rests were not exercised Required: Prepare all the necessary journal entries. PROBLEM 32-25 Comprehensive Problem You have been asked to audit the Tanya Company. During the course of yor audit, you are asked to prepare comparative data from company’s inception to the present. You have determined the following: A. Tanya charter became effective on January 2, 2017 when 20,000 shares of P10 ordinary shares and 10,000 shares of 7%cumulative, nonparticipating, preference shares were issued. The ordinary shares were sold at P12 ps par value of P100 per share share, and the preference shares were sold a ‘Tanya was unable to pay preference dividends at the end of first year. The shares for every 5 B. owners of preference share agreed to accept 2 ordinary sl preference shares owned in discharge of the preference dividends due on December 31, 2017. The shares were issued on January 2, 2018. The fait market value was P30 for ordinary shares at the date of issue. 1 C. Tanya acquired all the outstanding shares of Akinka Corporation °” May 2019 in exchange for 10,000 ordinary shares of Tanya. ton D. Tanya split its ordinary shares 3 for 2 on January 1, 2020, and 2 for on January 1, 2021. s E, Tanya offered to convert 20% of the preference shares to ordinary the basis of 2 ordinary shares for 1 preference share. The offer W45 oe and the conversion was made on July 1, 2021. 1401yr 32. Shareholders’ Equity _ ner == - 20 gpaividends were declared on ordinary until December 31,2019. Cash f ends per share of ordinary share shares were declared and paid as div! . follows JUNE 30 2019 2020 P1.50 2021 P1.25 P1.00 1s! questi preceding information, determine the following: Behe number of shares outstanding on December 31, 2019 1. ORDINARY PREFERENCE 5 30,000 10,000 b 30,200 9,800 a 35,000 10,000 @ 30,400 10,000 ‘The number of shares outstanding on December 31, 2020 a ORDINARY PREFERENCE 45,300 10,000 b 45,600 10,000 a 76,000 10,000 é@ 52,500 9,800 The number of shares outstanding on December 31, 2021 ORDINARY PREFERENCE a 95,200 8,000 b 49,600 10,000 ch 93,200 7,840 a 93,200 8,000 4, The amount of cash dividend declared and paid to shareholders in 2020 a P182,400 c. P159,600 b. P83,600 d. P121,600 5. The amount of cash dividend declared and paid to shareholders in 2021 a 214,200 c. P153,200 b. 217,200 d. P209,200 (PhilCPA adapted) PROBLEM 32-26 Comprehensive Problem Te shareholders’ equity of Brenalyn Corporation at January 1, 2021 appears low: 12% Preference shares, P200 par, 20,000 shares authorized, 7,000 shares issued and outstanding P 1,400,000 Only Premium - Preference shares E 175,000 3500 stares: #100 par, 180,000 shares authorized, ome 0 shares issued and outstanding 3,500,000 Premium ~ Ordinary shares 1,750,000 1402| ay 45099 Chapter 32 - Shareholders’ Equity Retained earnings During 2021, the following transactions occurred: Jan §: Issuance of 6,000 shares at P110 per share for cash, Stock is were paid by the corporation amounted to P80,000, Jan 28: Purchased 5,000 ordinary shares for the treasury at P200 per, Feb 2: Shareholders donated 4,000 entity's own ordinary shares 4° corporation {0 the Feb 14: Sold half of the treasury shares acquired last January 28 for py share 2b Feb 14: Sold the donated shares at P20 per share jul 15: ‘The company issued for P1,100,000 cash, 4,000 preference shar 1,000 ordinary shares. The preference and ordinary shares iawn Values of P220 and P120 per share, respectively on the date ofsale" Oct-15: Received subscriptions to 15,000 ordinary shares at P250 per share Nov 18: Received cash payment from each subscriber for 40% of the ordin shares subscription price. y Nov 27: Received full payment of the 10,000 shares on Oct. 15 and Nov. 1, Dee31: Closed net income of P1,000,000 from the income summary account retained earnings. Me coste ta Questions: Based on the above data, answer the following: 1. How much is the Preference share on December 31, 2021 statement o financial position? a. P1,400,000 c. P2,800,000 b. P2,200,000 d. P3,015,000 2. How much is the Ordinary share on December 31, 2021 statement financial position? a. P3,895,000 c. P5,200,000 b. 6,500,000 d. P6,300,000 3, How much is the Total share Premium on December 31, 2021 statement financial position? a. 5,200,000 c. P5,305,000 b. P4,555,000 d. P8,025,000 4. How much is the Retained earnings - unappropriated on December 31, 202! statement of financial position? a. P5,030,000 c. P4,980,000 b. 4,900,000 d. P5,480,000 5. How much is the total shareholders’ equity on December 31, of financial position? a. P16,275,000 c. P18,185,000 a. 17,435,000 d. P17,685,000 1403 " 2021 statem®™32.- Shareholders’ Equi pte 7 Comprehensive Problem M3 Problei p08 Company reported the followin liy. owing a arits December 31, 2020, statemar n atement of fi preference share, P100 par (10,000 share. ints in the shareholders’ equity oy eri! nancial position: 10% rized, 4,000 shares issued s autho™ share, P5 par (100,000 shares P 400,000 rained 40,000 shares issued au rer 200,000 Seed earnings 250,000 petal 500,000 otal P 1,750,000 poring 2022, ity: fl Paid the ay P10 oo share dividend on Preference share and a P2 per ynare dividend on ordinary share. These divi December 31, 2020, ividends had been declared on the following transactions transpired concerning shareholders’ purchased 5,000 shares of its own outstandin share. / 3) Reissued 2,000 treasury shares for land valued at P100,000, 4) Issued 4,000 preference shares with detachable warrants. The package sells for?120. The warrants enable the holder to purchase 2,000 ordinary shares at P30 per share. Immediately after the issuance of the share, the warrants are selling at P10 per share and the market value of the preference without the warrants is P90, 5) On October 1, 60% of the warrants are exercised. The remaining warrants were not exercised, Declared a 20% share dividend on the outstanding ordinary share when the stockis selling for P45 per share. Issued the share dividend, Net income for the year is P2,400,000. Declared the annual 2021 P10 per share dividend on preference share and the P2 per share dividend on the ordinary share. These dividends are payable in 2022, Questions: Based from the above data, answer the following: 1 How much is the balance of the Preference share on December 31, 2021 statement of financial position? % 400,000 cc. P800,000 b. P600,000 d, P452,500 2 How much is the balance of the Ordinary share on December 31, 2021 Statement of financial position? i ordinary share for P40 per 2 ses % 206,000 c. P247,200 6. 219.000 d, 244,200 1404A Chapter 32 - Shareholders’ Equity ______- 3, How much is the balance of the Retained earnings unapprops. i December 31, 2021 statement of financial position? Priateg c. 73,008,320 iy a, 3,128,320 b. P3,090,120 d. 22,970,120 How much is the balance of the Treasury share on December 34 A aay 4. statement of financial position? a. P200,000 c. P76,000 b. P80,000 d. P120,000 5. How:much i the total stockholders’ equity as of December 31, 2027 a. 4,394,320 c. P4,514,320 ‘ a. P4,432,520 d. P4,552,520 m prehensive Proble ynareholders’ equity account balan ces PROBLEM 32-28 Col e following s! Marianne Corporation had thé at December 31, 2020: eference shares (P2100 par ‘value; 100,000 0,000 shares issued and outstanding) 4,000,009 Jue; 200,000 shares authorized, 10% Convertible pr‘ shares authorized, 4 Ordinary shares (P10 par val 84,000 shares issued) 840,000 Subscribed ordinary shares 100000 Subscriptions receivable 52,000 Share premium 968000 Retained earnings 15,000.00. Total 20,948,000 #4000 Less: Treasury ordinary shares (4,000 shares) Total Shareholders’ Equity res account is composed of 10,000 shares tract required a cash down The subscribed ordinary shai with the balance due o0 subscribed at P13 per share. The subscription co payment equal to 60% of the subscription price, February 1, 2021. Transactions in 2021: 1) On February 1, 2021, the 8,000 ordinary shares were issued according * subscription contract. Because of default by a subscriber, 2,000 shares We not issued. All payments made by the subscriber were forfeited in favor 0 the Company. On March 1, 2021, 2,000 preference shares were converted to ordina shares, One preference share is convertible into two ordinary shares. time of conversion, the preference shares had a market value of P125 while the ordinary shares had a market value of P25 per share. z 3) On April 1, 2021, 92,000 share rights were issued (0 the oxi shareholders permitting the purchase of two new shares of ordinaty in exchange for one right and P15 cash. On April 25, 2021, 67:50 Fs rights were exercised when the market price of Marianne’s ordin@ S 1405ep 32> Sharcholders’ Equit ow “pooper share. Marianne iss es 32 ee h ed new shares to se H «Wen shares 0 rights werenot oxen wo settle the transaction, The and thus ex wei 2 ‘ pied, ember 30, 2021, 3,000 soptem 000 treasury sh _ shares ws ere relssued at P20 per 5, r anuaty 15, 2022, before the accounting record manne became aware that the rents re yene closed for 2021, : nt income for the 2020 Was Sanna °400,000. ‘The ater tax-offecr aati 2020 net ome Wa — appropri correcting entry w; the ae ry was recorded the after correcting the rent income, net income for 2021 was P2,500,000 cash dividends are declared for prefere, res 0 gnd october 31. Semi-annual cash divi share. ‘nce and ordinary shares on Apri n pril 30 idends for ordinary shares are P1 per stions: Bas jon the above data, determine the following as of December 31, 2021: 1, Preference shares 4, 74,000,000 c. P3,500,000 b. 73,860,000 d. P3,800,000 1, Ordinary shares a, 2,530,000 c. P2,310,000 b. 2,270,000 4. P2520,000 3, Total share premium a. P1,845,600 c. P1,839,600 b. 1,908,600 d, P1,925,100 4, Retained earnings - unappropriated a. ? 16,932,000 cc. P16,652,000 b, P16,552,000 d. 16,355,000 5, Total shareholders’ equity a 24,881,600 c. P24,601,600 b. 24,501,600 d. P24,300,100 PROBLEM 32-29 Comprehensive Problem Luke Corporation had the following shareholders’ equity account balances at December 31, 2020: Ordinary shares (P10 par value; 200,000 shares authorized, 84,000 shares issued) FT gaz0g00 Share premium san00 Retained earnings -Fie760.000" tet P 16,260,000 tes Treasury ordinary shares (4,000 shares) 44,000 000 ‘tal Shareholders’ Equity 216,216,000, 1406 EEChapter 32 = Shareholders’ Equity Transactions in 2021; a) On January 15, the company rei i a 5, ‘a eissued its 1,51 ea On Ja pany 1 its 1,500 treasury sharog a 0) b) On March 1, the company split the ordinary sh Per i ares 2.for 1 s °) On April 1, Luke Company declared several equipment as prea” payable on August 15, 2021. The carrying amount of th, 648,000. Data relating to the fair values of the equipment are tig Fair values (assume that the costs "lows," Perty diy © equipmattds Date to distribute are immaterial) April 1, 2021 700,000 August 15, 2021 650,000 d) On September 1, the company issued 4,000 shares of P50 par shares with detachable warrants. The package sells for P10, there enable the holder to purchase 2,000 ordinary shares at P15 pec t2m Immediately after the issuance of the share, the warrants are selling sa Per share and the market value of the preference without the warrenn P90. is €) On October 1, 80% of the warrants are exercised. The remaining warrant were not exercised. f)_ On November 2, 2,000 ordinary shares were retired at P20 per share. These ordinary shares were originally issued previous year at P15 per share, g) On December 15, the company declared a Pé per share cash dividends on the ordinary shares. h) Adjusted net income for 2021 was P2,400,000. Questions: Based on the above data, determine the following as of December 31, 2021: 1. Preference shares a. 260,000 c. P200,000 b. 540,000 d. Zero 2. Ordinary shares a. 836,000 c. P846,000 b. 847,000 d. P838,000 3. Total share premium a. 876,000 c. P844,500 b. 839,500 d. P831,500 4, Retained earnings - unappropriated a. 16,047,100 c. P16,074,600 b. 16,062,100 d, P16,152,500 5. Total shareholders’ equity a. 17,929,600 b. 917,929,200 . P18,010,000 |. P16,181,000 ae 1407 —32-30 Comprehens, poBLEM Wve Prot in _ — rd usted balances of the Shatehoti py . — Member 31, 2020 show the following; AUILY OF Capital Company on aa reference shares, P100 pap ordinary shares, P10 par P1,200,000 share premitim on preference shares 1,800,000 share premium on ordinary share 216,000 {otal contributed capital 900,000 getained earnings 4,116,000 gecumulated other comprehensive income, 2,300,000 varied increase in value of FyTOC] equity securities 61,740 Total vass Treasury shares (20,000 shares acquired on March 9, °°476000 020) " fol shareholders’ Equity 420,000 6,057,740 thefollowing transactions occurred during 2021; _ jan4 Issued 30,000 shares of ordinary at P25 per share jan.30 Paid the annual 2020 per share dividend os Preference share and the P2 per share dividend on ordinary shares “an Mar.2__ Issued 4,000 shares of preference atP128 per share. May7 _ Reissued 6,000 shares of treasury at 24 per share June 15 Split the ordinary shares two for one, July2. Declared a 5% share dividend on the outstanding ordinary shares tobe issued on August 3. The share is selling for P14 per share ‘ug.3_ Issued the share dividend. Oc Declared a property dividend payable to ordinary shareholders on November 1. The dividend consists of 20,580 shares of an Tnvestment in Lamb Company fair value through other comprehensive income securities, which had been acquired at a Cost of P12 per share and which have a carrying value of P15 per share. The share is currently selling for P16 per share. 92.15 The company issued for PB00,000 cash, 4,000 Preference shares and 1,000 ordinary shares. The preference share has a fair value of P150 on the date of sale. No fair value is available for the ordinary share, . Nov. Issued the property dividend to ordinary shareholders. The shareis currently selling for P20 per share. De 31 Declared the annual per share dividend on the outstanding Preference share and a P2 per share dividend on the outstanding 1 ordinary share, to be paid on January 30, 2022. he adj ‘djusted net income for the year was P2,250,000. Nestions; Teen above data, compute for the adjusted balance ofthe following on “ember 31, 2991, % 1408ON Chapter 32 - Shareholders’ Equity Sn 1. Preference shares a. 900,000 b. P800,000 Ordinary shares a. P2,296,000 b. P2,100,000 c P1,600,000 d. 72,000,000 243,000 0,000 ©. P2 dP ital Total paid-in capital / contributed cap! c, 24,114,000 a. P5,658,400 b. 76,458,400 dd. P6,478,000 Retained earnings ~ unappropriated : 2,506,400 eo a. P2,920,940 b. P2,878,800 |. P2,646,540 Total shareholders’ equity a, P9,379,340 c. 9,043,200 b. P9,422,460 d. P9,104,940 PROBLEM 32-31 Comprehensive Problem Your firm has been engaged to ex amine the financial statements of the Riel cember 31, 2021, its first year of operations. in Company for the year ended De have been assigned to audit the stockholders’ connection with this audit, you equity account. The partial unadjusted trial bal ws the following balances: lance as of December 31, 2021 show Debit Credit Land P 180,000 Dividends payable 352,000 Preference share 3,680,000 Ordinary shares 5,280,000 Subscribed ordinary shares 1,800,000 Subscriptions receivable 800,000 Retained earnings 580,000 Sales 4,080,000 Cost of sales 2,000,000 Operating expenses (including org, expense) 800,000 Stocks issue expenses 200,000 Your examination disclosed the following information: 1d 80,000 Jan.1 Issued 1,000 shares of Ordinary shares to the corporatio ‘Authorized 40,000 shares of P10 par value Ordinary shares an shares of 10%, P100 par value convertible Preference Share. exchange for Land valued at P340,000 and services value’ The property had cost the promoters P180,000 3 years befc company made the following entry to record the transaction: Land P 180,000 Organization expense 140,000 1409 n promoters it dat P140,000- fore. _—,32.- Shareholders’ Equity te! oo ae ord 20,000 sh: c ‘ ise 29 oe ach openventble Preference Share with a li fe” 1007 TREE aera be oor t0'5 shares of Ordinacn sh Se PISO ee UCM at a price oF peas nares: of Ordinary company paid P150,000 to an age Ben nt or Of P150 per share, and the made the Following entry to record the trance shares. The company P 320,000 ‘ansaction; Cash P 2,850,001 i 930,000 stock issue expense 150,000 Subscription receivable P 3,000,000 10 Sold 6,000 shares of the Ordina yan were P50,000. The company transaction: ry shares for P39 0 share, made the follons Per share. Issue costs ing entry to record the Cash P 2,290,000 Stock issue expense 50,000 Subscription receivable p 2.340'099 gr.10 8,000 shares of Ordinary shares were 450 per share. No shares are issued u in full. No cash was received. The co record the transaction: sold under stock subscriptions at intila subscription contract is paid mpany made the following entry to Subscriptions Receivable P 3,600,000 Subscribed Ordinary shares P 3,600,000 juy14 Exchanged 1,400 shares of Ordinary shares and 2,800 shares of Preference Share for a building with a fair market value of P1,020,000. The building was originally purchased for ?760,000 by the investors and has a book value of 440,000. In addition, 1,200 shares of Ordinary shares were sold for P480,000 in cash. The company made the following entry to record the transactions: Building 1,020,000 Preference share (1,020,000 x 2,800/4,200)P 680,000 Ordinary share (1,020,000 x 1,400/4,200) 340,000 Cash 480,000 Ordinary share 480,000 4ug.3 Received payments in full for half of the stock subscriptions and Payments on account on the rest of the subscriptions. Total cash received was P2,800,000. Shares of stock were issued for the subscriptions paid infull. The company made the following entry to record the transactions: Cash P 2,800,000 Subscription receivable Subscribed ordinary shares P._ 1,800,000 Ordinary shares P 2,800,000 P 1,800,000 1410 —_—_—oy Chapter 32 - Shareholders’ Equity : Dec.1 Declared a cash dividend of P10 per share on Preference gh, on December 31 to stockholders of record on December ya Payay, per share cash dividend on Ordinary shares, payable on janyyoM4 Py, following year to stockholders of record on December 15, phe fh, recorvled this transaction by debiting Retained earnings of psy 9™an, crediting Dividends payable of P580,000. 000 an Dec. 31 Paid the Preference Share dividend. The company record, transaction by debiting Dividends payable of P228,000 ang a this ting Cash of P228,000. Questions: , Based on the above and the result of your audit, compute for the adjusted ba of the following on December 31, 2021: lance 1. Preference share a, 2,480,000 © c. P2,200,000 b, P2,280,000 d. P2,000,000 2. Paid in capital in excess of par-preferred a, 1,110,000 c. 1,030,000 b. 1,050,000 d. P1,010,000 3. Ordinary shares a. P172,000 c. P136,000 b. 152,000 d, P134,000 4, Paid in capital in excess of par-Ordinary shares a. 7,452,000 c. 7,234,000 b. ?7,274,000 d. 6,534,000 5, Retained earnings a. 840,000 c. P620,000 b. 700,000 d. P440,000 6. Total stockholders’ equity a. P11,300,000 c. P10,620,000 b. 10,700,000 d. P10,540,000 PROBLEM 32-32 Comprehensive Problem You are engaged in making your second annual examination of Braycet Company, The company reported the following amounts in the stockholders equity section of its December 31, 2020 statement of financial position: Preference share, 10% P10 par (400,000 sh; 80,000 shares issued) (SOD share amber gene? Ordinary shares, P5 par (200,000 share: 40,000 shares issued) S authorized ae Share premium a Retained earnings 24008 Total sa 1411jxc Shareholders’ Equity _ tet ; ——— i anove were the adjusted balances that a a smal sm work papers. PPeared in 2070 gation disclosed the following information: sain 9,000 shares of its own outstanding Ordina purest ge stocks are still to be relssued by the eo state entry was made by the company: jn nary share Pieter cash ‘ Pou 7,800 shares acquired in (2) above for ¢ 60,000 Your December ry shares for P20 per mpany. The following 1 wey ‘the entry made was: quipment valued at mor quipment P 100,000 Ordinary share (2,800 x PS) >) {ia Go0 share premium san vatedena ae OOD: red share carries an annual dividend of 1 per shai ivi a Hera fas of December 31, 2020, unpaid cumulative civioeres Ss ounted to P6 per share: The entire accumulation was liquidated in May py issuing to the preference shareholders 80,000 shares of ordi oa ‘The entry made was debit to Other operating expense for pas0,o0d ang credit to Ordinary shares for the same amount. 4 ied 20000 shares of Preference Share at P1S per share The entry made was debit to Cash P300,000 and credit Preference Share P300,000. 4 bsared 10% stock dividend on the outstanding Ordinary shares when the stock is selling for P12 per share. Only memorandum entry was made by the pany. 9 cry he stock dividend. The entry made was debit to Share Premium 757400 and credit to Ordinary shares PS7,400. Dedared the annual 2021 P1 per share dividend on Preference Share and the 4050 per share dividend on Ordinary shares. These dividends are payable in 2022. No entry was made in the books in 2021. 4 Appropriated retained earnings for plant expansion, P1,200,000. The entry made was debit to Retained earnings unappropriated P1,200,000 and credit toRetained earnings appropriated for plant expansion, 1,200,000. 4] Thecompany reported the following in its 2021 income statement: Income Statement For the year ending December 31,2021 Sales P 5,880,000 Less: Cost of Sales Gross Income Less: Operating Ex; penses P 2,000,000 al OPerating Expenses 480,000 __2,480,000_ income P 1,400,000 Weston: used ased on the above and the result of your audit, compute for the ” ‘ance of the following on December 31, 2021: 1412 TEaE chapter 32- Sh 1, Preference a. 4,000,000 b. 71,100,000 2, Ordinary shares . P217,400 b. 216,000 share Premium a. 552,360 bp. 550,400 4, Unappropriated 2,195,100 b. P2,859,100 Treasury shares a. 160,000 pb. P104,000 arenolders ity Share retained earnings 2,675,100 2,815,100 ao c. 760,000 d, P56,000 1413