STOCKH KHOLDERS RS’EQU QUI TY PROBLEM NO. O.1
Al coyCor por at i on’ spos t cl osi ngt r i albal anceatDecembe r31,2006wasas f ol l ows : Al coyCor por at i on Po s t Cl o si ngT r i alBal anc e December31,2006 De bi t Account spayabl e Account sr ecei v abl e Reser v ef ordepr eci at i on Reser v ef ordoubt f ulaccount s Pr emi um oncommons t oc k Gai nonsal eoft r easuryst ock Bondspayabl e Bui l di ngandequi pment Cas h Cashdi vi dendspayabl eonpr ef er r edst ock Commons t oc k( P1parval ue) I nv ent or i es Land Avai l abl ef or sal esecur i t i e satf ai rv al ue Tr adi ngsecur i t i esatf ai rv al ue Ne tunr e al i z e dl os sona vai l abl e f or s al e s e c ur i t i e s Pr ef er r e ds t oc k( P50parv al ue) Pr epai dexpenses Donat e dcapi t al St oc kwar r ant sout s t andi ng Ret ai nedear ni ngs Tr easur ys t oc k–commo mmon,atcos t Tot al s
Cr e di t P 495, 000
P 963, 000 360, 000 54, 000 1, 800, 000 450, 000 720, 000 1, 980, 000 396, 000 7, 200 270, 000 1, 116, 000 684, 000 513, 000 387, 000 45, 000 900, 000 72, 000 800, 000 208, 000 415, 800 324, 000 P6, 480, 000
P6, 480, 000
AtDecembe r31,2006,Al coy had t he f ol l owi ng numbe rofcommon and pr e f e r r e ds har e s : Comm mmon 225
Pr ef er r ed
Aut hor i z ed I ss ue d Out s t andi ng
900, 000 270, 000 252, 000
90, 000 18, 000 18, 000
Thedi vi dendson pr ef er r e ds t oc ksar eP0. 40 cumul at i v e .I n addi t i on,t he pr e f e r r e ds t o c khasapr e f e r e nc ei nl i q ui dat i o no fP50pe rs har e . QUESTI ONS:
Basedont heaboveandt her esul tofyouraudi t ,det ermi mi net hef ol l owi ngas ofDec ember31,2006: 1. Addi t i onalpai di ncapi t al a. P3, 213, 000 b. P3, 258, 000
c. P3, 050, 000 d. P2, 600, 000
2. Tot alcont r i but edcapi t al a. P4, 428, 000 b. P4, 220, 000
c. P3, 770, 000 d. P1, 170, 000
3. Unappr opr i at edr e t ai nedear ni ngs a. P415, 800 b. P739, 800
c. P91, 800 d. P37, 800
4. Tot alst ockhol der s’equi t y a. P4, 266, 800 b. P4, 519, 800
c. P4, 888, 800 d. P4, 474, 800
PROBLEM NO. O.2
Your audi tcl i ent ,Ar gao,I nc. ,i s a publ i c ent er pr i se whose shar es ar e t r adedi nt heov er t hecount ermar ket . AtDece mber31,2005,Ar gaohad 3, 000, 000 aut hor i z ed shar esofP10 parv al ue comm mmon s t oc k,ofwhi c h 1, 000, 000 shar eswer ei ssued and out st andi ng. Thes t ockhol der s’equi t y account satDece mber31,2005hadaf ol l owi ngbal ances . Commons t oc k Addi t i onalpai di ncapi t al
P10, 000, 000 3, 750, 000 226
Re t ai nedear ni ngs
3, 250, 000
Tr ansact i ons dur i ng 2006 and ot her i nf or mat i on r el at i ng t o t he s t o c kho l de r s ’e q ui t yac c ount swe r easf o l l o ws : •
•
•
•
•
•
•
•
On Januar y2,2006,Ar gaoi ss uedatP54 pers har e,50, 000 shar esof P50parv al ue,9% cumul at i vec onver t i bl epr ef er r edst ock. Each share ofpr ef er r ed st ock i s conve r t i bl ei nt ot wo shar es ofc ommon st ock. Ar gaohad300, 000aut hor i z edshar esofpr ef er r eds t oc k. Thepr ef er r ed s t o c khasal i q ui dat i o nv al uee qualt oi t sparv al ue . On Febr uar y1,2006,Ar gaor eac qui r ed 10, 000 shar esofi t scommon st ockf orP16pershare. On Apr i l30,2006,Ar gaosol d250, 000share s( pr evi ousl yuni ssued)of P10parval uecommons t ockt ot hepubl i catP17pershar e. On June15,2006,Ar gaodec l ar edacas h di vi dend ofP1 pers har eof common st ock,payabl eon Jul y15,2006,t ost ockhol der sofr ec or don Jul y1,2006.
On Nov ember10,2006,Ar gaosol d 5, 000 shar esoft r eas ur ys t ockf or P21pershar e. On Dec ember15,2006,Ar gao decl ar ed t he ye ar l y cas h di v i dend on pr ef err edst ock,payabl eonJanuary15,2007,t ost ockhol der sofr ecor d onDecember31,2006. On Januar y 20,2007,bef or et he books wer e cl os ed f or2006,Ar gao becameawar et hatt heendi ngi nv ent or i esatDecember31,2005 wer e under s t at ed by P150, 000 ( af t ert ax effecton 2005 ne ti nco me was P90, 000) .Theappr opr i at ecor r ect i onent rywasr ecor dedt hesameday. Af t er cor r ect i ng t he begi nni ng i nvent or y ,ne ti ncome f or 2006 was P2, 250, 00.
QUESTI ONS:
227
Basedont heaboveandt her esul tofyouraudi t ,det ermi net hef ol l owi ngas ofDec ember31,2006: 1. Addi t i onalpai di ncapi t al a. P5, 700, 000 b. P5, 525, 000
c. P5, 500, 000 d. P5, 725, 000
2. Unappr opr i at edr e t ai nedear ni ngs a. P4, 125, 000 b. P4, 035, 000
c. P4, 045, 000 d. P3, 955, 000
3. Tr eas ur ys t oc k a. P160, 000 b. P 80, 000
c. P55, 000 d. P50, 000
4. Tot alst ockhol der s’equi t y a. P22, 190, 000 b. P24, 770, 000
c. P24, 690, 000 d. P24, 840, 000
5. Bookv al uepe rshar eofcommonst oc k a. P17. 89 c. P17. 71 b. P17. 82 d. P15. 41
PROBLEM NO.3
Thes t oc khol der s ’equi t ysect i on oft heAs t ur i asI nc.showed t hef ol l owi ng dat a on December 31,2005: Common s t oc k,P3 par ,300, 000 shar es aut hor i ze d,250, 000 shar es i ssued and out st andi ng,P750, 000;Pai di n c api t ali ne x c e s so fp ar ,P7, 050, 000;Addi t i o nalpai di nc api t alf r o m s t o c k opt i ons,P150, 000;Ret ai ned earni ngs,P480, 000. Thes t ock opt i onswer e gr ant ed t o key exe cut i ve sand pr ovi ded t hem t her i ghtt o acqui r e30, 000 shar esofcommon st ockatP35pershar e. Each opt i on hasaf ai rval ueof P5att het i met heopt i onswer egr ant ed. Thef ol l owi ngt r ansact i onsoccur r eddur i ng2006: Feb. 1
Ke y execut i v es exer ci sed 4, 500 opt i ons out s t andi ng at Dec ember31,2005. Themar ketpr i cepershar ewasP44 at
228
t hi st i me . Apr . 1
Thecompanyi ssued bondsofP2, 000, 000 atpar ,gi vi ngeac h P1, 000 bond a det ac habl e war r ant e nabl i ng t he hol der t o pur chaset woshare sofst ockatP40 each f ora1yearper i od. The bonds woul d sel latP996 perP1, 000 bond wi t houtt he war r ant .
Jul y 1
Thecompanyi ssuedr i ght st os t oc khol der s( oner i ghton eac h s har e ,e x e r c i s abl ewi t hi n a 30da ype r i o d)pe r mi t t i ngho l de r s t o acqui r eoneshar eatP40 wi t h ev er y10 r i ght ssubmi t t ed. Al lbut 6, 000 r i ght s wer e exer ci sed on Jul y 31, and t he addi t i onalst ockwasi ssued.
Oct . 1
Al lwar r ant si ssued i n connec t i on wi t ht hebonds on Apr i l1 wer eexer ci sed.
Dec. 1
Themar ke tpr i cepershar edr oppedt oP33andopt i onscame due.Becauset hemar ketpr i cewasbel ow t heopt i on pr i ce,no r emai ni ngopt i onswer eexer ci sed.
Dec.31
Ne ti ncomef or2006wasP250, 500.
QUESTI ONS:
Basedont heaboveandt her esul tofyouraudi t ,det ermi net hef ol l owi ngas ofDec ember31,2006: 1. Commonst ock a. P777, 300 b. P848, 700
c. P833, 850 d. P850, 050
2. Tot aladdi t i onalpai di ncapi t al a. P7, 522, 200 b. P8, 402, 800
c. P8, 219, 650 d. P8, 419, 450
3. Tot alcont r i but edcapi t al a. P8, 299, 500 b. P9, 053, 500
c. P9, 269, 500 d. P9, 251, 500
229
4. Re t ai nedear ni ngs a. P580, 500 b. P858, 000
c. P730, 500 d. P654, 150
5. Tot alst ockhol der s’equi t y a. P10, 000, 000 b. P 9, 784, 000
c. P9, 030, 000 d. P9, 982, 000
PROBLEM NO.4
Bal amban Cor por at i on was aut hor i z ed at t he begi nni ng of2004 wi t h 540, 000aut hor i z edshar esofP100,parval uecommons t ock.AtDec ember 31,2004,t hest ockhol der s’equi t ysect i onofBal amban wasasf ol l ows: Commons t ock,parval ueP100pershar e;aut hor i z ed 540, 000shar es;i ssue d54, 000shar es Addi t i onalpai di ncapi t al Re t ai nedear ni ngs Tot als t oc khol der s ’equi t y
P5, 400, 000 540, 000 810, 000 P6, 750, 000
OnMay10,2005,Bal ambani ss ued90, 000shar esofi t sc ommons t oc kf or P10, 800, 000. A 5% s t oc k di vi dend wasdec l ar edon Sept ember30,2005 andi ss uedonNov ember10,2005t ost ockhol der sofr ec or donOct ober31, 2005. Mar ketval ueofcommon st oc k wasP110 pershar eon decl ar at i on dat e. Thene ti nco meofBal amban f ort hey earendedDec ember31,2005 wasP855, 000. Dur i ng2006,Bal ambanhadt hef ol l owi ngt r ansact i ons; Feb.15
Bal amban r eac qui r ed 5, 400 shar es ofi t sc ommon s t oc kf or P95pershare .
May 15
Bal amban sol d 2, 700 shar es ofi t st r eas ur y st oc kf orP120 pershar e.
Jun 30
I ssuedt os t oc khol der sones t oc kr i ghtf oreac h shar ehel dt o pur chaset woaddi t i onalshar esofcommonst ockf orP125per shar e.Ther i ght sexpi r eonDece mber31,2006. 230
Aug.15
45, 000s t oc kr i ght swer eexer ci sed when t hemar ke tv al ueof commonst oc kwasP130pershar e.
Sep. 30
72, 000st oc kri ght swer eexe r ci se dwhent hemar ke tv al ueof t hecommonst oc kwasP140pershar e.
Dec.01
Bal amban decl ar ed acash di vi dend ofP2 pershar epayabl e on Januar y15,2007 t os t oc khol der sofr ec or d on Dec ember 31,2006.
Dec.15
Bal amban r e t i r ed 1, 800 shar es ofi t st r eas ur ys t oc k and r ev er t edt hem t oan unuse dbasi s. On t hi sdat e,t hemar ket v al ueoft hecommons t ockwasP150pershar e.
Dec.31
Ne ti ncomef or2006wasP900, 000.
QUESTI ONS:
Basedont heaboveandt her esul tofyouraudi t ,det ermi net hef ol l owi ngas ofDec ember31,2006: 1. Commonst ock a. P38, 520, 000 b. P26, 640, 000
c. P38, 340, 000 d. P38, 250, 000
2. Addi t i onalpai di ncapi t al a. P8, 329, 500 b. P8, 338, 500
c. P5, 413, 500 d. P8, 266, 500
3. Re t ai nedear ni ngs a. P1, 080, 000 b. P1, 002, 600
c. P1, 017, 000 d. P1, 008, 000
4. Tr eas ur ys t oc k a. P18, 000 b. P90, 000
c. P85, 500 d. P 0
231
PROBLEM NO.5
BogoCor por at i onbeganoper at i onsonJanuar y1,2006.Thecompanywas aut hor i z ed t oi ssue 60, 000 shar esofP10 parval ue common s t oc k and 120, 000sharesof10%,P100parval ueconver t i bl epr ef err edst ock. I n connec t i on wi t h youraudi toft hecompany’ sfinanci alst at ement s,you no t e dt hef o l l o wi ngt r ans ac t i o nsi nv o l v i ngs t oc kho l de r s ’ e qui t ydur i ng2006:
Jan. 1
I ssued 1, 500 shar es ofcommon s t oc kt ot he cor por at i on pr omot er si n ex changef ore qui pmentval uedatP510, 000and ser vi cesv al uedatP210, 000. Thepr oper t ycost sP270, 000 3 y ear s ago and was car r i ed on t he pr omot er s ’books at P150, 000.
Jan. 31
I ssued 30, 000 shar esofconver t i bl epr ef er r ed s t oc k atP150 pershar e. Each shar e can be conve r t ed t o five s har es of common s t oc k. Thec or por at i on pai d P225, 000 t oan agent f ors e l l i ngt hes har e s .
Feb. 15
Sol d 9, 000 shar esofcommon s t oc k atP390 pershar e. The corporat i onpai di ssuecost sofP75, 000.
May 30
Recei v edsubscr i pt i onsf or12, 000shar esofcommonst oc kat P450pershar e.
Aug.30
I ssued 2, 100 shar es ofcommon s t oc k and 4, 200 shar es of pr ef er r edst ocki n exchangedf orabui l di ngwi t h af ai rmar ket v al ueofP1, 530, 000. Thebui l di ngwasor i gi nal l ypur c hased f or P1, 140, 000 by t he i nve s t or s and has a book v al ue of P660, 000. I n addi t i on,1, 800 shar esofcommon s t ockwer e sol df orP720, 000cash.
Nov .15
Payment si nf ul lf or hal foft he subsc r i pt i ons and part i al payment sf or t he r es t of t he subscr i pt i ons wer er ece i ve d. Tot alcash r ecei v ed was P4, 200, 000. Shar es ofs t oc k wer e i ssued f or t he f ul l y pai d subscr i pt i ons. The bal ance i s c ol l e ct i bl ene xty ear .
232
Dec. 1
Decl ar edac ashdi vi dendofP10pershar eonpr ef er r edst oc k, pay abl e on December 31 t o s t oc khol der s of r ecor d on December15,and P20 pers har ecas h di vi dend on common st ock,payabl eon January15,2007t ost ockhol der sofr ecor d onDecember15.
Dec.31
Pai dt hepr ef er r eds t oc kdi vi dend. Neti ncomef ort hefir styearofoper at i onswasP1, 800, 000.
QUESTI ONS:
Basedont heaboveandt her esul tofyouraudi t ,det ermi net hef ol l owi ngas ofDec ember31,2006: 1. Commonst ock a. P204, 000 b. P144, 000
c. P264, 000 d. P186, 000
2. Pai di nc api t ali ne x c e s so fparv al ueofpr e f e r r e ds t o c k a. P1, 500, 000 c. P1, 275, 000 b. P1, 545, 000 d. P1, 860, 000 3. Pai di ncapi t ali nexces sofparval ueofcommonst ock a. P 8, 211, 000 c. P11, 121, 000 b. P10, 851, 000 d. P10, 032, 000 4. Re t ai nedear ni ngs a. P1, 050, 000 b. P1, 170, 000
c. P 930, 000 d. P1, 458, 000
5. Tot alst ockhol der s’equi t y a. P17, 295, 000 b. P16, 950, 000
c. P15, 810, 000 d. P17, 010, 000
233
PROBLEM NO.6
TheBor bonCor por at i onhasrequest edyout oaudi ti t sfinanci alst at ement s f ort heyear2006. Dur i ngyouraudi t ,Bor bon pr esent edt oyou i t sbal ance sheetasofDecember31,2005cont ai ni ngt hef ol l owi ngcapi t alsect i on: Pr ef er r edst ockP10par;60, 000share saut hori ze dand i ssued,ofwhi ch6, 000aret r easurysharescost i ng P90, 000andshownasanasse t Commonst ock,parval ueP4;600, 000shar esaut hor i z ed, ofwhi c h450, 000ar ei ssue dandout s t andi ng Addi t i onalpai di ncapi t al( P5pershar eonpr ef er r eds t oc k i ssuedi n2000) Al l owancef ordoubt f ulaccount sr ecei v abl e Reser v ef ordepr eci at i on Reser v ef orfir ei nsur ance Re t ai nedear ni ngs Tot als t oc khol der s ’equi t y
P 600, 000 1, 800, 000 300, 000 12, 000 840, 000 198, 000 2, 250, 000 P6, 000, 000
Addi t i onali nf or mat i on: 1) Oft hepr ef er r ed st ock,3, 000 shar eswer esol df orP18 pers har eon Augus t30,2006. Bor bon cr edi t edt hepr oceedst ot hePr ef er r edSt oc k account . Thet r easur yshar esasofDec ember31,2005wer eacqui r ed i nonepur c hasei n2005. 2) Thepr ef er r ed s t ockcarr i esan annualdi vi dend ofP1 pershar e. The di vi dendi sc umul at i ve . AsofDece mber31,2005,unpai dcumul at i ve di vi dends amount ed t o P5 pershar e. The ent i r e acc umul at i on was l i qui dat ed i n June,2006, by i ssui ng t ot he pr ef er r ed st ockhol der s 54, 000shar esofcommons t oc k. 3) A cashdi vi dendofP1 pershar ewasdec l ar edon Dec ember1,2006 t o pr ef er r ed st ockhol der sofr ecor d December15,2006. Thedi vi dend i s payabl eonJanuar y15,2007.
234
4) AtDec ember31,2006,t heAl l owancef orDoubt f ulAcc ount sRec ei vabl e andRese r vef orDepr eci at i onhadbal ancesofP25, 000andP1, 050, 000, r e spe ct i v el y . 5) On Mar c h 1,2006,t heRes er vef orFi r eI nsur ancewasi ncr ease d by P60, 000;Re t ai nedEarni ngswasdebi t ed. 6) On Dec ember31,2006,t heRes er v ef orFi r eI nsur ancewasdecr eas ed by P30, 000, whi c h r epr esent st he car r yi ng v al ue of a mac hi ne dest r oyedbyfir eon t hatdat e. Est i mat edfir ecl eanup cost sofP6, 000 doesnotappearont her ecor ds. 7) TheDec ember31,2005Ret ai nedEarni ngsconsi st soft hef ol l owi ng: Donat edl andf r om ast ockhol der ( Mar ke tv al ueondat eofdonat i on) Gai nsf r om t r easur ys t oc kt r ans act i ons Ear ni ngsr e t ai nedi nbusi ness
P450, 000 51, 000 1, 749, 000 P2, 250, 000
8) Ne ti ncomef ort heyearendedDecember31,2006 wasP1, 297, 500per company’ sr ecor ds. QUESTI ONS:
Based on t heaboveand t her esul tofyouraudi t ,de t er mi net headj ust ed bal ances of t he f ol l owi ng as of December 31, 2006. ( Di sr egar dt ax i mpl i c at i ons ) 1. Tot alAddi t i onalpai di ncapi t al a. P414, 000 b. P804, 000
c. P810, 000 d. P864, 000
2. Re t ai nedear ni ngs-Appr opr i at ed a. P258, 000 b. P303, 000
c. P228, 000 d. P 0
3. Re t ai nedear ni ngs-Unappr opr i at ed 235
a. P2, 677, 500 b. P2, 626, 500
c. P2, 578, 500 d. P2, 623, 500
4. Tr eas ur ys t oc k a. P45, 000 b. P90, 000
c. P36, 000 d. P 0
5. Tot alst ockhol der s’equi t y a. P3, 700, 500 b. P5, 812, 500
c. P6, 316, 500 d. P6, 319, 500
PROBLEM NO.7
Thes t oc khol der sequi t yofCor dov aCor por at i on showed t hef ol l owi ngdat a onDecember31,2005: 12% pr ef er r edst ock,P30par ,135, 000shar es i ssuedandout s t andi ng Commons t oc k,P50par ,180, 000shar esi ss ued
P4, 050, 000
andout st andi ng Pr emi um o npr ef er r eds t oc k Pr emi um oncommons t oc k Ret ai nedearni ngs
9, 000, 000 1, 080, 000 3, 240, 000 1, 395, 000
The2006t r ansact i onsoft hecompanyaffect i ngi t ss t oc khol der s ’equi t yar e summari zedchr onol ogi cal l yasf ol l ows: 1.
I ssued27, 000shar esofpr ef er r eds t oc katP40.
2.
I ssued94, 500s har esofcommonst oc katP70.
3.
Re t i r ed5, 400shar esofpr ef er r eds t oc katP45.
4.
Pur c hased13, 500shar esofi t scommons t oc katP80.
5.
Spl i tcommonst oc kt wof orone( parval uer educet oP25) .
6.
Rei ssued13, 500shar esoft r eas ur ys t oc k–commonatP50. 236
7.
St oc khol der sdonat ed t ot hecompany9, 000 shar esofcommon s t oc k when shar eshadamar ke tpr i ceofP52. Onehal foft heseshar eswer e subsequent l yi ssuedf orP54.
8.
Di vi dendswer epai d att heend oft hecal endary earon t heco mmon s t o c katP2pe rs har ea ndo nt hepr e f e r r e ds t o c katt hepr e f e r r e dr at e .
9.
Ne ti ncomef ort heyearwasP2, 520, 000. QUESTI ONS:
Basedont heaboveandt her esul tofyouraudi t ,det ermi net hef ol l owi ngas ofDec ember31,2006: 1. Pr ef er r edst ock a. P4, 617, 000 b. P4, 698, 000
c. P4, 968, 000 d. P4, 860, 000
2. Commonst ock a. P15, 615, 000 b. P13, 500, 000
c. P13, 968, 000 d. P13, 725, 000
3. Addi t i onalpai di ncapi t al a. P6, 777, 000 b. P6, 858, 000
c. P6, 679, 800 d. P6, 814, 800
4. Unappr opr i at edr e t ai nedear ni ngs a. P1, 749, 240 b. P2, 251, 440
c. P1, 711, 440 d. P1, 684, 440
5. Tot alst ockhol der s’equi t y a. P26, 949, 240 b. P26, 922, 240
c. P26, 958, 960 d. P26, 940, 240
PROBLEM NO.8
You wer eabl et ogat hert hef ol l owi ngi nf or mat i on i n connect i on wi t h your audi to ft hes t oc kho l de r s ’e qui t ys e c t i ono ft hebal anc es he e to fLi l o an,I nc . 237
The company i s a manuf act ur erofsc hooland office equi pment . As of Dece mber31,2005,t hest ockhol der ’ sequi t yoft hecompanyi spr ese nt ed bel ow: Cumul at i vepr ef er r edst ock( P15parval ue;100, 000 share saut hori ze d,12, 000share si ssuedand out s t andi ng) Commons t ock( P10parval ue;1, 000, 000shar es aut hor i z ed,330, 000shar esi ssuedandout s t andi ng Re t ai nedear ni ngs
P 180, 000 3, 300, 000 1, 866, 000 P5, 346, 000
Li l o an’ sc api t als t o c kt r ans ac t i o nsdur i ng2006we r easf o l l o ws : a. On January31,24, 000pr ef er r edshar eswer ei ss uedi ne xc hangef or l andwi t h af ai rval ueofP300, 000. Si xmont hsago,2, 000share sof Li l o an’ spr e f e r r e ds t o c kwe r ee x c hang e d“ o v e rt hec o unt e r ”f o rP14pe r share. b. On Febr uar y14,13, 500shar esofcommon s t oc kwer esol dt oMs.P. SawayatP25pershar e. c. On Dece mber 14,Li l oan pur c hase d di ssi dent s t oc khol der Saway ’ s 13, 500 shar es atP27 per s har e. The shar es ar et o be he l d as t r e as ur ys har e s .( Sa wa yv i o l e nt l yo ppo s ed Li l o an’bus i ne s ss t r at e g y andLi l oan’ smanagementdeci dedt oel i mi nat eheri nt er est . ) d. On Dec ember 20,Li l oan cont r act ed wi t h Ms.But if or t he sal e of 30, 000 pr ev i ousl y uni ss ued shar esatP25 pers har et o be i ss ued when t he pur c hase pr i ce i sf ul l y pai d. At December 31, onl y P585, 000hadbee npai d.But iagr ee dt opayt hebal anceonorbef or e Januar y31,2007.
e. On Dec ember31,Li l oan r e t i r ed 12, 000 pr ef er r ed shar esatP18 per share. f . A cas hdi vi dendofP2pershar ewasdec l ar edont hepr ef er r edshar es onOct ober15,andpai donNov ember15.
238
g. A cas h di vi dend ofP1. 50 pershar ewasdec l ar ed on December15, andpayabl eonJanuar y15,2007. h. Li l oan’ sne ti ncomef ort hey ear2006wasP750, 000. QUESTI ONS:
Basedont heaboveandt her esul tofyouraudi t ,det ermi net hef ol l owi ngas ofDec ember31,2006: 1. Pr ef er r edst ock a. P360, 000 b. P300, 000
c. P264, 000 d. P324, 000
2. Commonst ock a. P3, 435, 000 b. P4, 020, 000
c. P3, 735, 000 d. P3, 637, 500
3. Addi t i onalpai di ncapi t al a. P592, 500 b. P202, 500
c. P625, 500 d. P142, 500
4. Tot alr et ai nedear ni ngs a. P1, 977, 000 b. P1, 648, 500
c. P2, 013, 000 d. P2, 037, 000
5. Tot alst ockhol der s’equi t y a. P6, 171, 000 b. P6, 036, 000
c. P6, 396, 000 d. P6, 336, 000
PROBLEM NO.9
I n co nnec t i on wi t h yo uraudi toft he Por o Company ,y ou wer e aske dt o pr eparecomparat i vedat af r om t hecompany’ si ncept i ont ot hepr esent .The f ol l owi ngwer egat her eddur i ngyouraudi t :
239
a.
Por o Company’ sc har t erbecame e ffect i v e on Januar y 2,2002,when 80, 000 shar esofP10 common and 40, 000 shar esof5% cumul at i v e, nonpart i ci pat i ng,pr ef er r edst ockwer ei ssued. Thec ommon st ockwas sol datP12pers hareandt hepr ef er r edst ockwassol dati t sparval ue ofP100pershar e.
b.
Por owasunabl et opaypr ef er r ed di vi dendsatt heend ofi t sfir s ty ear . Theowner soft hepr ef er r eds t oc kagr eedt oaccept2shar esofcommon st ock f orever y50 sharesofpr ef err ed st ock owned i n di schargeoft he pr ef er r ed di vi dends due on Dec ember 31,2002. The shar es wer e i ss uedon January2,2003. Thef ai rmar ketval uewasP30pershar e f orcommonont hedat eofi ssue.
c.
Por o Company ac qui r ed al lout s t andi ng s t oc k ofPos Cor por at i on on May1,2004,i nexc hangef or40, 000shar esofPor ocommons t ock.
d.
Por ospl i ti t sc ommons t oc k3f or2on Januar y1,2005,and2f or1on Januar y1,2006.
e.
Por ooffer edt oconv er t20% oft hepr ef er r eds t oc kt ocommons t oc kon t hebasi sof2share sofcommon f or1shareofpr ef er r ed.Theofferwas acce pt ed,andt hec onve r si onwasmadeonJul y1,2006.
f .
Noc as h di vi dendswer edecl ar edonco mmonst oc kunt i lDecember31, 2004. Cashdi v i dendspershar eo n common s t oc kwer edecl ar edand pai dasf o l l o ws : 2004 2005 2006
Jul y1 P3. 00 P2. 50
December31 P4. 00 P5. 00 P2. 00
QUESTI ONS:
Basedont heaboveandt her esul tofyouraudi t ,det ermi net hef ol l owi ng: 1. Out s t andi ngnumberofcommonshar esaso fDecember31,2006 a. 364, 800 c. 372, 800 b. 684, 800 d. 380, 800
240
2. Out s t andi ngnumberofpr ef er r edshar esasofDec ember31,2006 a. 40, 000 c. 32, 000 b. 24, 000 d. 96, 000 3. Amountofcash di vi dendsdecl ar ed and pai dt ocommon s t oc khol der s f ort heyear2005 a. P972, 800 c. P1, 459, 200 b. P608, 000 d. P1, 981, 440 4. Amountofcash di vi dendsdecl ar ed and pai dt ocommon s t oc khol der s f ort heyear2006 a. P3, 911, 040 c. P1, 713, 600 b. P3, 041, 600 d. P1, 673, 600 PROBLEM NO.10
You wer eabl et ogat hert hef ol l owi ngi nf or mat i on i n connect i on wi t h your audi tofSogodCorporat i on: •
•
•
On Januar y 1, 2004,Sogod Cor por at i on gr ant ed s t oc k opt i ons t o office r s and keyempl oy ee sf ort he pur c haseof30, 000 shar esoft he company’ sP10 parval uec ommon s t oc katP25pershar e.Theopt i ons areexer ci sabl ewi t hi n a 5yearperi od begi nni ngJanuary1,2006,by gr ant eess t i l li nt heempl oyoft hecompany ,andexpi r i ngDecember31, 2010. The ser vi ce per i od f or t hi s award i s 2 year s. The f ai rv al ue opt i on pr i ci ng modeldet er mi ned t ot alcompensat i on expense t o be P525, 000. Thest ock wassel l i ngatP35 att het i met heopt i onswer e gr ant ed. On Apr i l1,2005,3, 000 opt i onswer et er mi nat ed when t heempl oy ee s r es i gned f r om t hec ompany . Themar ke tv al ueofcommon s t oc k was P35pershareont hi sdat e. On Mar c h 31,2006,18, 000 opt i on shar es wer eexe r ci se d when t he mar ketv al ueofcommons t oc kwasP40pershar e.
QUESTI ONS:
Basedont heaboveandt her esul tofyouraudi t ,det ermi net hef ol l owi ng: 241
1. Compensat i onexpensef or2004 a. P525, 000 b. P262, 500
c. P236, 250 d. P150, 000
2. Ne tcompensat i onex pensef or2005 a. P262, 500 b. P210, 000
c. P120, 000 d. P150, 000
3. Theexer ci seoft he18, 000opt i onswi l lr esul ti nacr edi tt oAPI Cexcess overparof a. P585, 000 c. P270, 000 b. P620, 000 d. P450, 000 4. API Cf r om s t oc kopt i onsaso fDec ember31,2006 a. P 0 c. P472, 500 b. P90, 000 d. P157, 500
PROBLEM NO.7
OnDec embe r31,2011,LaCos tCompany' sfinanci als t at ement s s ho we dt hef o l l o wi ngbal anc e sr e l at e dt oi t ss e cur i t i e sac c ount s : Tr adi ngsecur i t i es P1, 477, 500 Av ai l abl ef or sal esecur i t i es( AFS) 1, 180, 000 LaCost ' ssecur i t i esport f ol i oonDece mber31,2011,wasmade upoft hef ol l o wi ngse cur i t i e s: Cl as si fic at i on Tr adi ng Tr adi ng Tr adi ng Av ai l abl e f or s al e
242
Cos t
Fai rVal ue
750, 000
762, 500
550, 000
528, 250
250, 000
186, 750
590, 000
630, 000
490, 000
550, 000
Se c ur i t y 10, 000Yey e BonelCor p. shares 8, 000Tot oyBi bo I nc .s har e s 10% May ni l adl ad bonds 10, 000Bul akl ak I nc .s har e s 20, 000Jumbo I nc .s har e s Dur i ng2012,t hef o l l o wi ngt r ans ac t i o nst o okpl ac e : Mar . 1 Pur c hase d 3, 000 addi t i onal s har es of Ye y eBonel Co r p.f orP229, 500,c l as s i fie dashe l df o rt r adi ng . Apr .15 Sol d4, 000shar esofTot oyBi boI nc.f orP69pers har e. May4 Sol d4, 000shar esofBul akl akI nc.f orP62per shar e. Oct .30 Pur c hased15, 000shar esofPasawayCo.f or P832, 500, c l as s i fie dashe l df ort r adi ng . Thef ai rv al uesoft heshar esandbondsonDe cember31,2012, ar easf ol l o ws : Ye y e Bone lCor p.s har e s P76. 60pershar e Tot oyBi boI nc.shar es P68. 50pershar e Pasa wayCo.shar es P55. 25pershar e Mayni l adl adwat erbonds P205, 550 Bul akl akI nc.shar es P61. 00pershar e JumboUnl i mi t edI nc.s har es P27. 00pershar e QUESTI ONS:
Basedont heaboveandt her esul tofyouraudi t ,det er mi net he f ol l owi ng: 243
31. Gai no rl o s sons al eo f4, 000T o t o y Bi boI nc .s har e so nApr i l 15,2012 a. P1, 000g ai n c. P1, 875gai n b. .P1, 000l oss d. P1, 875l oss 32. Ne tr e al i z e dg ai norl os sons al eof4, 000Bul akl akI nc .s har e s onMay4,2012 a. P12, 000g ai n c . P12, 000l oss b.P4, 000g ai n d. P4, 000l oss 33. Carr yi ngamountofTr adi ngSecur i t i esasofDecember31, 2012 a. P2, 337, 000 c . P2, 304, 100 b.P2, 287, 800 d. P2, 297, 400 34. Car r y i ngamounto fAv ai l abl ef orSal eSe c ur i t i e saso f December31,2012 a. P844, 000 c . P906, 000 b.P806, 000 d. P944, 000 35.I n2012,whatamountofunr eal i z edgai norl ossshoul dbe shownasc omponentofi nc omeandequi t y? I ncome Equi t y a. P28, 725g ai n P62, 000gai n b. P28, 725g ai n P22, 000l os s c . P32, 900l os s P122, 000l oss d. P39, 600g ai n P78. 000gai n
244
