FINANCIAL ACCOUNTING AND REPORTING II FINAL QUIZ 2/3 1. The accounts shown below appear in the December 31, 2003 trial of Hollow Corporation:
Preferred stock, authorized P0 par Unissued preferred stock Common stock, authorized P20 par Unissued common stock Subscription receivable, preferred stock Subscription receivable, common stock Subscribed preferred stock Subscribed common stock Treasury stock, preferred, at cost Additional paid-in capital Retained earnings All subscription receivables are due in year 2004. stockholder ’s equity of Hollow Corporation? a. 11,040,000
P10,000,000 3,600,000 4,000,000 2,000,000 380,000 360,000 600,000 440,000 1,360,000 1,700,000 2,000,000 How much is the total
b. 11,780,000 c. 12,400,000 d. 13,760,000 2. Compute for the Stockholder’s Equity using the following data; Bonds payable Additional paid-in capital on common stock Donated capital Treasury stock at cost Common stock, par P100 Common stock option warrants Investments in marketable securities Additional paid-in capital from treasury stock Retained earnings a. b. c. d.
P300,000 50,000 40,000 20,000 500,000 100,000 70,000 15,000 135,000
720,000 760,000 820,000 860,000
3. The Magic Lamp Corporation was incorporated on January 1, 2002, with following authorized capitalization: · 40,000 shares of common stock, no par value, stated value P40 per share · 10,000 shares of 5% cumulative preferred stock, par value of P10 per share During 2002, Magic Lamp issued 24,000 shares of common stock for for a total of P1,200,000 and 6,000 shares of preferred stock at P16 per share. In addition, on December 19,2002, subscriptions for 2,000 2, 000 shares of preferred pr eferred stock stoc k were taken at a purchase price of P17. These subscribed shares were paid for on January 4, 2003. What should Magic Lamp report as total contributed capital on its December 31, 2002 balance sheet? a. b. c. d.
1,040,000 1,262,000 1,296,000 1,330,000
4. The stockholders’ equity of May Co. revealed the following on January 1, 2007: Preference Share, P100 par value P230,000 Paid-in Capital in Excess of Par - Preference 80,500 Ordinary Share, P15 par value 525,000
Paid-in Capital in Excess of Par – Ordinary Subscribed Ordinary Share Retained Earnings Notes Payable Subscription Receivable — Ordinary How much is the legal capital of the company? a. P1.3055M c. P0.76M b. P1.115M d. P0.755M
275,000 5,000 190,000 400,000 40,000
5. Queenie Corporation was incorporated on January 2, 2007. The following information pertaining to Queenie’s ordinary stock transactions: 1/2/07 Number of shares authorized 80,000 1/1/07 Number of shares issued 60,000 7/1/07 Number of shares reacquired but not canceled 5,000 12/1/07 Two-for-one stock split What is the number of shares of Queenie’s ordinary share outstanding at December 31, 2007? a. 150,000 c. 115,000 b. 120,000 d. 110,000 6. Corridor Company issued 6,000 shares of its P10 par common stock to Max L. as compensation for 1,000 hours of legal services performed. Max L. usually bills P500 per hour for legal services. On this data of issuance, the stock was selling at a public trading trading at P150 per share. By what amount should the additional paid in capital account of Corridor Company will increase as a result of the issuance of those shares? a. 60,000 b. 440,000 c. 900,000 d. 3,000,000 7. On July 1, 2003, Boom exchanged 2,600 shares of its p24 par value stock for land. A few months ago, the land was appraised by an independent appraiser at P100,000. Boom is currently trading at the stock exchange at P45. Earnings per share is P40. P40. How much should be debited to Land account? a. P 62,400 b. P100,000 c. P104,000 d. P117,000
8. In 2006, Inna Corporation acquired 6,000 shares of its Pl0 par value ordinary shares at P36 per share. During 2007, Inna issued 3,000 of these shares at P50 per share. Inna uses the cost method to account for its treasury stock transactions. What accounts and amounts should Inna credit in 2007 to record the issuance of the 3,000 shares? Treasury Additional Retained Common Stock Paid-in Capital Earnings Stock a. P102,000 P42,000 P6,000 b. P144,000 P6,000 c. P108,000 P 42,000 d. P108,000 P 42,000 9. Way Co. reported the following following in its statement statement of equity on January 1, 2007: Ordinary Share, PS par value, 200,000 shares authorized; 100,000 shares issued P 500,000 Additional Paid-in Capital 1,500,000 Retained Earnings 516,000 P2,516,000 Less Treasury Stock, 5,000 shares at cost 40,000 Total shareholders’ equity P2,476,000
The following events occurred in 2007: May 1 1,000 shares of treasury stock were sold for P10,000. July 9 10,000 shares shares of previously unissued ordinary share were sold for P12 per share. October 1 The distribution of a 2-for-1 stock split resulted in the ordinary share’s par value being halved. Jennifer accounts for treasury stock under the cost method. How many shares are issued and outstanding at December 31, 2007? a. 220,000 and 216,000 b. 220,000 and 212,000 c. 110,000 and 106,0900 d. 100,000 and 95,000 10. Compute for the Stockholder’s Equity using the following data; Bonds payable Additional paid-in capital on common stock Donated capital Treasury stock at cost Common stock, par P100 Common stock option warrants Investments in marketable securities Additional paid-in capital from treasury stock Retained earnings a. b. c. d.
P300,000 50,000 40,000 20,000 500,000 100,000 70,000 15,000 135,000
720,000 760,000 820,000 860,000
11. Following are shown on the balance sheet of Pay Company: Capital Stock, P100 par, 1,000 shares P100,000 Premium on Capital Stock 2,000 Additional Paid-in Capital from Treasury Stock 3,000 Retained Earnings 75,000 Treasury Stock, 200 shares at cost 25,000 The whole 200 shares of treasury stock were sold for P20,000. How would the resale of the treasury stock be recorded? a. Cash 20,000 Treasury Stock 20,000 b. Cash 20,000 Premium on Capital Stock 2,000 Additional Paid-in Capital from Treasury Stock 3,000 Treasury Stock 25,000 c. Cash 20,000 Retained Earnings 5,000 Treasury Stock 25,000 d. Cash 20,000 Additional Paid-in Capital from Treasury Stock 3,000 Retained Earnings 2,000 Treasury Stock 25,000 12. On July 1, 2005, value of stock was capital stock, divided of the stock is a. 2
Alto Corporation declared a 1 for 5 reverse stock split, when the market P100 per share. Prior to the split, Alto had P1,000,000 credited to into 100,000 shares issued and outstanding. After the split, the par value into b. 10
c. 20
d. 50
13. X grant of 30,000 stock appreciation rights enables key employees to receive cash equal to the difference between P20 and the market price of the stock on the date each right is exercised. The service period is year 2000 through year 2002, and the rights are exercisable in in
2003and 2004. The market price of the stocks was P25 and P28 on December 31,. 2000 and 2001, respectively. As of December 31, 2001, what amount of liability should be reported by X pertaining to stock appreciation right? a. 240,000 b. 160,000 c. 110,000 d. 165,000 14. On May 31, 206, Ball Corporation’s board of directors declared a 10% stock dividend. The market price of Ball ’s 30,000 outstanding shares of P20 par value common stock was P80 per share on that date. The stock dividend was distributed on July 31, 2006, whn the stock ’s market price was P100 per share. What amount should Ball credit to additional paid in capital for this stock dividend? a. 0 b. 240,000 c. 180,000 d. 300,000 15. The Powerpoint Corporation has two classes of stock outstanding: 9%, P20 par Preference and P70 par Ordinary. During the fiscal year ending December 31, 2008, the company had the following equity transactions in chronological order:
Issue of preference share Issue of ordinary share Reacquisition and retirement of preference Purchase of treasury ordinary share Stock split Reissue of treasury ordinary share
No. of Shares 10,000 35,000 2,000 5,000 2-for-1 5,000
Price per Share P28 70 30 80 52
Balances of the accounts in the shareholders’ equity section of the December 31, 2007 balance sheet were: Preference Share, 50,000 shares P1,000,000 Ordinary Share, 100,000 shares 7,000,000 Paid-in Capital in Excess of Par, Preference 400,000 Paid-in Capital in Excess of Par, Ordinary 1,200,000 Retained Earnings 550,000 Dividends were paid at the end of the fiscal year on the common stock at P1.20 per share and on the preferred stock at the preferred rate. Net income for the year was P850,000. How much should be the amount of Preference Share shown on the December 31, 2007 balance sheet? a. P1,220,000 b. P1,160,000 c. P1,140,000 d. P1,116,000 P1,116,0 00 16. On March 30, 2007, Mitz Co. declared a 30% ordinary share dividend. Shares were selling on the market on this date at P25 per share. The par value is Pl0 per share and 180,000 shares are outstanding. In distributing the stock dividend, Mitz Co. issued fractional share warrants totaling 600 shares. Assuming that 60% of the warrants are exercised and the remaining warrants expire, the t he entry to record the exercise and expiration of the fractional share warrants is a. Fractional Share Warrants Issued 15,000 Ordinary Share 9,000 PIC from Forfeited Warrants 6,000 b. Fractional Share Warrants Issued 6,000 Ordinary Share 3,600 PIC from Forfeited Warrants 2,400 c. Fractional Share Warrants Issued 15,000 Ordinary Share 3,600 PIC from Forfeited Warrants 11,400 d. Fractional Share Warrants Issued 15,000 Ordinary Share 15,000 17. Quebec Corporation, a calendar-year company, had sufficient retained earnings in 2007 as a basis for dividends, but was temporarily short of cash. Quebec declared a dividend of P100,000 on April 1, 2007, and issued promissory notes to its stockholders in lieu of cash. The notes, which were dated dated April 1, 2007, had a maturity date of March 31, 2 008, and a 10% interest rate. How should Quebec account for the scrip dividend and related interest? a. Debit Retained Earnings for for P110,000 on April 1, 2007. b. Debit Retained Retained Earnings for P110,000 on March 31, 2008.
c. Debit Retained Retained Earnings for P100,000 on April 1, 2007 and debit Interest Interest Expense for P10,000 on March 31, 2008. d. Debit Retained Earnings for P100,000 on April 1, 2007 and debit Interest Expense for P7,500 on December 31, 2007. 18. The directors of Pete Corporation, whose P50 par value ordinary share is currently selling at P70 per share, have decided to issue a stock dividend. Pete has an authorization for 250,000 ordinary shares, has issued 100,000 shares shares of which 10,000 shares are now held as treasury, and desires to capitalize P945,000 of the Retained Earnings balance. To accomplish this, the percentage of stock dividend that the directors should declare declare is a. b.
18.9% 15%
c. 12% d. 9%
19. Sine Co. had outstanding 20,000 shares of P100 par value 8% cumulative preference shares and 30,000 shares of P50 par value ordinary shares on December 31, 2007. At December 31, 2006, dividends in arrears on the preference shares were P80,000. Cash dividends declared in 2007 totaled P300,000. The amounts paid to preference shareholders and ordinary shareholders are: a. P80,000 and P220,000 b. P160,000 and P140,000 c. P220,000 and P80,000 d. P240,000 and P60,000 20. At December 31, 2006 and 2007, 200 7, Eagle Company had outstanding 4,000 4, 000 shares of P100 par value 12% cumulative, fully participating preference share and 20,000 of Pl0 par value ordinary share. At December 31, 2006, dividends in arrears on the preference share were P24,000. Cash dividend declared in 2007 totaled P108,000.What P108,00 0.What are the amounts of dividend per share on the preference and ordinary shares, respectively? a. P20.00 and Pl.40 c. P18.00 and Pl.40 b. P20.00 and Pl.80 d. P18.00 and Pl.80 21. On March 2, 2007, Nanette Corporation issued issued 4,000 shares of 6% cumulative P100 par value preference share for P434,000. Each preference share carried one nondetachable stock warrant which entitles the holder to acquire at P17, one share of Nanett e’s Pl0 par ordinary stock. On March 2, 2007, the market price of the preference share without the warrants was P90 per share and the market price of the stock warrants was P15 per warrant. What is the amount credited to Paid-in Capital in Excess of Par- Preference by Nanette on the issuance of the stock? a. P0 c. P34,000 b. P8,000 d. P62,000 22. On July 1, 2007, Tools Company granted stock options to key employees for the purchase of 20,000 shares of the company’s ordinary stock at P25 per share. The options are intended to compensate employees for the next two years. The options are exercisable within a four-year period beginning July 1, 2009 by grantees still in the employ of the company. The market price of Tool s’ ordinary share was P33 per share at the date of grant. No stock options were terminated during the year. How much should Tools charge to compensation expense for the year ended December 31, 2007? a. P0 c. P80,000 b. P40,000 d. P160,000 23. On May M ay 1, 2007, Maine Company Compan y issued P2 million, 20-year, 10% 10 % bonds bond s for P2,120,000. Each P1,000 bond had a detachable warrant eligible for the purchase of one share of Maine’s P50 par ordinary share for P60. Immediately after the bonds were issued, Main e’s securities had the following market values: 10% bonds without warrants — P1,040; Warrants — P20; Ordinary Share P50 par — P56. What amount should Maine record as additional paid-in capital? a. P120,000 c. P40,000 b. P80,000 d. P0
24. Below is the stock holder s’ equity section of P Preferred stock, 7%, P100 par value, 30,000 shares authorized and issued, total liquidation value, P3,200,000 Common stock, no par, 50,000 shares, authorized and issued Donated Capital
P3,000,000 1,500,000 500,000
Retained Earnings All preferred dividends have been fully paid. How much is the book value per share of common stock? a. 125.80 b. 126.00 c. 130.00 d. 300
4,500,000
25. E Corp.s balance sheet reports the following stock holder s’ equity: 5% Cumulative Preferred stock, P100 par, 5,000 shares issued and outstanding……………………………………………P500,000 Common stock, P10 par, 50,000 shares issued and outstanding, P500,000 APIC………………………………………………………p300,000 Retained Earnings ………………………………………..P 700,000 Diviedends in arrears on the preferred stock amount tp P50,000. If E Corp were to be liquidated, the preferred stockholders would receive par value plus premium of P10/share. How much would be the book value per share on common stock? a. 24,000 b. 28,000 c. 29.50 d. 30.00 26. The stockholders’ equity of J Corp. on December 31, 2003 shown the following balances: 10% Preferred stock, 5,000 shares, P100 par……………………P500,000 12% Preferred stock, 6,000 shares, P100 par…………………… 600,000 Common stock, 10,000 shares, P40 par………………………… 400,000 APIC…………………………………………………………… 320,000 Retained Earnings………………………………………………. 480,000 The 10% Preferred stock is cumulative and fully participating, while the 12% preferred stock is non cumulative and fully participating. Dividends in arrears are 2 years. What is the book value per share of common stock? a. 44.00 b. 59.68 c. 60.27 d. 102.80
27. The stockholder’s equity of S Corp. shows the following balances on December 31, 2003: 10% Preferred stock, cumulative and non participating, P100 par, with liquidation value of P110, 20,000 shares ………………………………………..P2,000,000 Common stock, P100 par, 30,000 shares……………………. 3,000,000 Subscribed Common stock ………………………………… 1,000,000 …………………………………. Subscription Receivable……………………………………. 600,000 Treasury stock, 5,000 of common, at cost……………………….400,000 APIC……………………………………………………………..660,000 Retained earnings…………………………………………….. 1,580,000 What is the book value per share of common stocks, assuming preferred dividends are in arrears since 2001? a. 144.00 b. 149.70 c. 155.42 d. 161.14 28. Ayos Company had the following capital structure during 2006:
Preferred stock, P 100 par, 4% cumulative, 25,000 shares Issued and outstanding Common stock, P50 par, 200,000 shares issued and outstanding
2,500,000 10,000,000 10,000, 000
Ayos reported net income of P5,000,000 for the year ended December 31, 2006. Ayos paid no preferred dividends during 2005 and paid P160,000 in preferred dividends during 2006. In its December 31, 2006 income statement, what amount should Ayos report as basic earnings per share? a. 24.50 b. 24.20 c. 24.80 d. 25 29. At January 1, 2006, Will Company had 500,000 shares of common stock outstanding. On October 1, 2006, an additional 120,000 shares of common were issued for cash. Will also had P4,000,000 of 8% convertible bonds outstanding at December 31, 2006, which are convertible into 100,000 shares of common. What is the number of hares that should be used in computing diluted earnings per share on December 31, 2006? a. 720,000 b. 630,000 c. 600,000 d. 530,000
Ans key ACCCD BDCBC DDBCB BDBDA CBCBB BAAD
