DOMALAON, LORIE JAE E. ACT 123
May 21, 2017 SHE
EASY Problem 1 On September 30,2014 Pink Pink Company issued 3,000 shares of its P10 par ordinary shares in connection with a share diidend! "o entry was made on the share diidend declaration date! #he market alue per share immediately after the issuance was P1$! Pink%s shareholders% e&uity accounts immediately before issuance of the share diidends were as follows' OS, P10 par, $0,000 shares authori(ed P2$0,000 Paid in capital in e)cess of par 300,000 *etained +arnins 3$0,000 #reasury #reasury shares, shares, $,000 shares shares at cost -40,000. /hat should be the *etained +arnins balance immediately after the share diidend declaration SOLUTION: *etained +arnins 3$0,000 pprop! or small stock diidend -3k P1$. -4$,000. Balanc a!"# $%&%$n$ $cla#a"%'n (30),000
Problem 2 +co Company declares a 10 scrip diidends on 5uly 1,2014 payable a year after with 12 interest! #he total par alue of the outstandin shares of +co is P10,000,000! /hat is the total appropriation to the retained earnins as a result of the script diidends declaration SOLUTION: P10,000,000 P10,000,000 10 6 (1,000,000 Problem 3 7elon company has a retained earnins balance of P400,000 at the end of 201$! 8urin 2014, it had issued P100,000 of $9year, 12, lon9term bonds! #he bond proisions re&uire re&uire that each year year oer the $9year $9year period an additional P20,000 of retained earnins be unaailable for diidends! #his restriction restriction is in addition to any other retained earnins restriction that the company miht make! 8urin 201$, the company also decided to :self9 insure; aainst ow much is the total appropriated retained retained earnins as of 8ecember 31,201$
DOMALAON, LORIE JAE E. ACT 123 SOLUTION: ppropriation for bond redemption -2014. ppropriation for bond redemption -201$. ppropriation for self9insurance A**#'*#%a"$ !'# RE
May 21, 2017
20,000 20,000 =,000 (+,000
Problem 4 #he 8ouble>eart Company wants wants to raise its workin capital! fter fter analysis of the aailable options, the company decides to issue ?,000 shares of P30 par preference shares shares with detachable warrants! #he packae of the shares and warrants sells for P120! #he warrants enable the holder to purchase ?,000 shares of P10 par ordinary shares at P40 per share! @mmediately followin the issuance of the shares, the share warrants are sellin at P10 per share! #he market alue of the preference shares shares without the warrants is PA0! /hat amount should be assined to the share warrants issued (720,000 SOLUTION: P120 ?,000 shares 6 B20,000 10 6 PB2,000 Problem $ Casio,@nc! bean operations in 5anuary 5a nuary 2014, and reported the followin results for each of its three years of operations! 2014 P300,000 net loss 201$ 30,000 net loss 201? 3,A$0,000 net income at 8ecember 31,201? the company%s capital accounts were as follows' $ cumulatie prefence shares, par alue P100D authori(ed, P100,000 sharesD issued and outstandin ?0,000 shares P?,000,000 ordinary shares, par alue P10D authori(ed 1,000,000 sharesD issued and outstandin =00,000 =,000,000 rance, @nc! has neer paid a cash or stock diidend and there has been no chane in the capital accounts since it bean operations! /hat is the book alue of the ordinary shares on 8ecember 31, 201? (13.+0 SOLUTION: =,000,000 E 2,B20,000 6 10,B20,000 =00,000 shares 6 (13.+0 Problem ? #he followin are the shareholders% e&uity e&uity accounts of #aiwan #aiwan Company at 8ecember 31,201?! Ordinary shares P10 parD authori(ed 200,000 sharesD @ssued A0,000 shares A00,000 Preference shares, 12 P2$parD authori(ed 100,000 sharesD @ssued 1$,000 sharesDcumulatie 3B$,000
DOMALAON, LORIE JAE E. ACT 123
May 21, 2017
Share premium 2,$000,000 *etained +arnins 4,B$0,000 #reasury #reasury shares shares -B,$00 ordinary ordinary shares. 3B1,2$0 #he preference preference shares are are participatin in distribution in in e)cess of a 1$ 1$ diidend rate on the ordinary shares! "o diidends hae been paid in 2014 or 201$! On 8ecember 31,201?, 31,201?, india wants to pay a cash diidend of P2 a share to ordinary shareholder sha reholders! s! /hat is the amount to be paid to preference shareholders shareholders (1)3,7)0 SOLUTION: A0,000 E ?3,B$0 6 (1)3,7)0
MODERATE Problem B partial list of the accounts and endin account balances taken from the post9closin trial balance of lpha Corporation on 8ecember 31,2014 is shown as follows' ccumulated pro
410,000 220,000 $0,000 210,000 4?0,000 30,000 A00,000 4$,000 112,000 400,000 4,000 3,000 20,000 $00,000 100,000 $0,000 2$,000 220,000 1$0,000 100,000 1$,000 20,000
Compute for the total stockholder%s e&uity!
SOLUTION: uthori(ed OS at P10 par alue
A00,000
DOMALAON, LORIE JAE E. ACT 123 Jnissued OS uthori(ed PS at P$0 par alue Jnissued PS Ordinary shares subscribed, net Preference shares subscribed, net Paid9in Capital Jnreali(ed increase in alue *ealuation increment in properties ccumulated pro
May 21, 2017 -$00,000. 400,000 -100,000. 30,000 30,000 ?21,000 3,000 100,000 410,000 220,000 ( 2,11+,000
Problem = #he stockholders% e&uity of the Geta Geta as of 8ecember 31,2013 31,2013 was as follows' Common stock, P10 par, authori(ed 300,000 sharesD 2$0,000 shares issued and outstandin 2,$00,000 Paid in capital in e)cess of par 3,B$0,000 *etained earnins 1,=00,000 On Kune 1,2014, Geta re&uired 40,000 40,000 shares of its common stock at P40 per share! #he followin transactions occurred occurred in 2014 with reard reard these shares' sha res' 5uly 1 sold 1$,000 treasury treasury shares at P4$ P4$ 5uly 1$ 2 for 1 share split split uust uust 1$ 1$ sold sold 34,00 34,000 0 treas treasury ury share shares s at P1$ P1$ September 1 retired 2 2,,000 sh shares 8etermine 8etermine the correct correct balance of Common Stock! SOLUTION: JnadKusted balance 2,$00,000 September 1 -10,000. A$"$ Balanc ( 2,+0,000
HARD Problem A "eada S&uare Company has the followin selected selected accounts in its shareholders% e&uity section as of 8ecember 31, 2014' Preference shares, P100 par, 10 cumulatie, 100,000 shares issued and outstandin P10,000,000 ordinary shares, P20 par, 1,000,000 shares authori(ed B00,000 shares issued and outstandin 14,000,000 share premium =,000,000 ccumulated pro
DOMALAON, LORIE JAE E. ACT 123
May 21, 2017
#here are are no diidends in arrears arrears on the preference preference shares! 8urin 8urin 201$, the followin transactions occurred' occurred' a! #he board board of director directors s declared declared a cash diidend diidend totalin totalin to P2,=00,000 to be paid to preference and ordinary shareholder! Hater a share diidend of 100,000 ordinary shares shares were declared on OS! #he market market alue of OS is P?= per share share on the date the share diidends were declared! b! Sometime after the the aboe diidends were were declared and settled, the board of directors declared as property diidends one shares of its inestment in Gino Corp! stocks bein held by the company as
