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Shareholder's Equity - PracAcc

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52 views14 pages

Shareholder's Equity - PracAcc

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Clyn CF
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jon 24-10 solut question 1 Answer C nares issued — Dcemeber 31, 2020 (7,500,000 / PS par) 1,500,000 Treasury Shares — December 31, 2020 (600,000) gpares outstanding December 31, 2020 900,000 Question 2 Answer b share issued — December 31, 2019 (4,500,000 / PS par) 900,000 Treasury shares — December 31,2019 (400,000) shares outstanding December 31, 2019 500,000 Question 3 Answer a Share issued — December 31, 2020 1,500,000 Shares issued — December 31, 2019 900,000 600,000 Shares issued during 2020 600,000 Question 4 Answer a _ December 31, 2020 December 31,2019 Increase Share capital 7,500,000 4,500,000 3,000,000 Share premium 52,000,000 40,000,000 12,000,000 15,000,000 Total issue price in 2020 Divide by shares issued during 2020 £00,000 Average issue price ) 343 Problem 24-10 (IAA) ing i ion froma Levi Company provided the following information compere, statement of financial position: December 31, 2020 December 31,25, . 7,500,000 4,500, share premium 52,000,000 40.000 9 000 I Retained earnings 19,500 5,500,095 Treasury shares, at cost, ee on December 31, 2020 and 400, shares on December 31, 2019 7,000,000 5,000,09) 1. Whatis the number of outstanding shares on December 31, 2979) 1,506,000 1,000,000 900,000 600,000 poop 2. Whatis the number of. outstanding shares on December 31, 2019? a. 900,000 b. 500,000 c. 400,000 d. 700,000 3. How many shares were issued during 20202 600,000 300,000 200,000 500,000 aeocp What was the average price of, additional shares issued in 2020? a. 25 b. 20 c. 10 gL 5 342 solution 24-9 Question 1 Answer a yssued (10,000 shares x 50) jssued (20,000 shares x 50) share capital Question 2 Answer a ssued (10,000 shares x 20) Issued (20,000 shares x 30) Share premium Question 3 Answer a Share capital Share premium Retained earnings Treasury shares (3,000 x 100) Total shareholders’ equity Net income Dividends paid Retained earnings Question 4 Answer a Share capital Share premium Total contributed capital 341 500,000 1,000,000 1,500,000 200,000 600,000 800,000 1,500,000 800,000 800,000 300,000) 2,800,000 1,000,000 (200,000) 800,000 Problem 24-9 (IAA) ss Company Was Organized any ar, Gue: feurr50 shares with P50 par value. At the beginning 0 ty had the following transactions Felting authorized to issue During the current year, the enti to shareholders’ equity: shares at P70 per share. Issued 20,000 shares at P80 per share. Reported net income of P1,000,000. Paid dividends of P200,000. Purchased 3,000 treasury shares at P100 per share. das share capital at year-end? Issued 10,000 1. What amount should be reporte a. 1,500,000 b. 3,300,000 c. 1,200,000 d. 1,800,000 What amount should be reported as share premium at year-end? a. 800,000 b. 200,000 c. 600,000 d. (a What oe should be reported as total shareholders’ equity at a. 2,800,000 b. 3,000,000 c. 3,300,000 d. 2,000,000 4. What amount sh year-end? int should be reported as contributed capital # a. 2,300,000 . b. 1,500,000 c. 3,000,000 d. 2,000,000 340 solution 24-8 yestion I Answer a yssuance of ordinary share: (950,000 x 1/2 x 15) Net income for 2019 pividend declared in 2019 Son January 1, 2019 Total shareholders’ equity — December 31, 2019 Question 2 Answer a shareholders’ equity - December 31, 2019 Issuance of ordinary shares (100,000 x 17) ssuance of preference shares (150,000 x 8) Issuance of preference shares (50,000 x 9) Net income for 2020 Dividend declared in 2020 Total shareholders’ equity — December 31, 2020 339 ( ( 7,125,000 1,025,000 230,000) 7,920,000 7,920,000 1,700,000 1,200,000 450,000 1,215,000 635,000) 11,850,000 Problem 24-8 (IAA) vesan speations by Lig Penn Come Oe rdinary shares ofp)" On January 1, 2 . half of the 950,000 ot Py i eet ed for issue: ae that had been authorized for! ri7 refe : In addition, the entity had 500,000 authorized preference hate, n add . of P5 par value. During 2019, the entity had P1 02 P230,000 of dividend. ntity had the following transactions: 5,000 of net income and declary During 2020, the ¢1 + {Issued 100,000 ordinary shares for P17 per share. * Issued 150,000 preference shares for P8 per share. * Authorized the purchase ofa custom-made machine to be delivered in January 221. The entity restricted P300,000 of retained earings for the purchase of the machine. Issued additional 50,000 preference shares for P9 per share. Reported P1,215,000 of net income and declared on December 31, 2020 a dividend of P635,000 to shareholders of record on January 15, 2021 to be paid on February 1,2021. What amount should be reported as total shareholders’ equity on December 31, 2019? 7,920,000 7,125,000 8,150,000 8,380,000 pose wv What amount should be , ; December 31, 2020? Teported as total shareholders’ equity" a. 11,850,000 b. 11,550,000 © 12,485,000 a. 10,635,000 338 problem 24-7 (AICPA Adapted) ne current year, Hyatt Company issued for P110 per share. ng tt : pen00 convertible preference shares of P100 par value es of one preference share may be converted into three ordinary shar p25 par value at the option of the preference shareholder. At year-end, all of the preference shares were conv erted ir ALY” The market value of the ordinary share at the convers! shares- was P40. nto ordinary on date amount should be credited to ordinary share capital as a |, What result of conversion? a, 1,125,000 b. 1,500,000 c, 1,650,000 d. 1,800,000 t should be credited to share premium as a result of ey What amoun conversion? 375,000 525,000 150,000 0 aeop Solution 24-7 Question 1 Answer a Question 2 Answer b Torecord the issuance of preference shares: Cash (15,000 x 110) 1,650,000 Preference share capital Share premium — preference 1,500,000 150,000 T . . . orecord the conversion of preference shares into ordinary shares: qrierence share capital 1,500,000 are premium — preference 150,000 Ordinary share capital (45,000 x 25) L Share premium — Ordinary wn 000 5,000 mn on 1 , 5 15, 5000 preference shares x 3 = 45,000 ordinary shares) 337 Problem 24-6 (IAA) ; On January 1, 2019, Negros Company was incorporated with the following authorized capitalization: Ordinary share capital, 200,000 shares, no par, 2000 P100 stated value Pen 000,009 Preference share capital, 200,000 shares, 10% f1 1000 rate, P50 par value , 000,009 i ity i dinary shares for a 1 2019, the entity issued 150,000 or on ofl P 18,000,000 and 50,000 preference shares at P60 per share In addition, on December 15, 2019, subscriptions for 20,009 preference shares were taken at a purchase price of P100. These subscribed shares were paid for on January 15,2020. Net income for 2019 was P5,000,000. What amount should be reported as total contributed capital on December 31, 2019? a. 28,000,000 b. 21,000,000 c. 23,000,000 d. 26,000,000 Solution 24-6 Answer c Ordinary share capital — 150,000 shares . 18,000,000 Preference share capital — 50,000 shares x 60 3,000,000 Subscribed preference share capital — 20,000 x 100 2,000,000 Total contributed capital 23,000,000 Observe that the subscribed preference share capital is already included in contributed capital because the subscription receivable is collected within one year. Otherwise, the subscription receiy i ‘ wise, ab: from subscribed share capital le is deducted Contributed capital includes the a d any . re; in share premium but does not include retained camives.” : The cost of treasury shares i i i contributed capital or paid in capital, peseceelinicoL Tas 336 problem 24-5 (AICPA Adapted) poe ized with beginning of current year, Ashe Company was organize Aerize capital of 100,000 shares of P200 par value. al Jnuty 10 Issued 25,000 shares at P220 a share March 25 Issued 1,000 shares for legal services when the fair value was P240 a share september 30 Issued 5,000 shares for a tract of land when the faiz value was P260 a share |, What amount should be reported as share capital? a. 7,640,000 b. 6,200,000 c. 7,440,000 d. 5,000,000 2. What amount should be reported for share premium? 840,000 800,000 540,000 500,000 aesop Solution 24-5 Question 1 Answer b January 10 (25,000 x 200) 5,000,000 March 25 ( 1,000 x 200) 200,000 September 30 ( 5,000 x 200) 1,000,000 Share capital , 6,200,000 Question 2 Answer a January 10 (25,000 x 20) 500,000 March 25 ( 1,000 x 40) 40,000 September 30 ( 5,000 x 60) 300,000 Total share premium 840,000 335 Problem 24-4 (AICPA Adapted) At the beginning of the current year, Cove Company, a closely-helg entity, issued 6% bonds with a maturity value of 6,000,000, together with 10,000 ordinary shares of P50 par value, for a combined cash amount of P11,000,000. Ifissued separately, the bonds would have sold for P4,000,000 on an 8% yield to maturity basis. 1. What amount of the proceeds should be allocated to the ordinary shares? a. 4,000,000 b. 7,000,000 c. 8,000,000 d. 5,000,000 2. What amount should be reported for share premium on the issuance of the ordinary shares? 7,500,000 6,500,000 5,500,000 4,500,000 BO oP Solution 24-4 Question 1 Answer b Question 2 Answer b Cash received * 11,000,000 Market value of bonds payable : (4,000,000) Residual amount allocated to ordinary shares 7,000,000 Par value of ordinary shares (10,000 x 50) (500,000) Share premium 6,500,000 Cc ash 11,000,000 Discount on bonds payable 2,000,000 Bonds payable 6,000,000 Share capital 500,000 Share premium 6,500,000 334 golution 24-3 estion 1 Answer c question 2 Answer c Market value Fraction ordinary shares (10,000 x 36) 360,000 36/90 Preference shares (20,000 x 27) 540,000 54/90 900,000 Question 3 Answer c Proceeds from preference shares Par value of preference shares (20,000 x 20) Share premium — preference shares Question 4 Answer c Proceeds from ordinary shares Par value of ordinary shares (10,000 x 20) Share premium — ordinary shares ’ Journal entry Cash 800,000 Preference share capital Share premium — preference Ordinary share capital Share premium — ordinary 333 Allocated proceeds 320,000 480,000 800,000 480,000 400,000 80,000 320,000 200,000 120,000 400,000 80,000 200,000 120,000 Problem 24-3 (AICPA Adapted) At the beginning of the current ye ordinary shares of P20 p ar, Ria Company issued 10,009 ar value and 20,000 convertible Preferenc, shares of P20 par value for a total of P800,000. At this date, the ordinary share convertible preference share was sel! 1. . What amount should be recorded as was selling for P36 and th. ling for P27. What amount of the proceeds should be allocated to the preference shares? a. 600,000 b. 540,000 c. 480,000 d. 440,000 . What amount of the proceeds should be allocated to the ordinary shares? a. 360,000 b. 200,000 c. 320,000 d. 400,000 . What amount should be recorded as share premium from the issuance of preference shares? a. 180,000 b. 100,000 c. 80,000 d. 0 . h F the issuance of ordinary shares? oe a. 200,000 b. 160,000 c. 120,000 d. 0 roblem 24-2 (PHILCPA Adapted) P Glenn Company provided the following information at year-end preference share capital, P100 par 3,060,000 share premium - preference share 500,000 Ordinary share capital, P10 par 6,000,000 Share premium - ordinary share 2,000,000 subscribed ordinary share capital 4,000,000 Retained earnings 2,500,000 subscription receivable - ordinary share” 1,000,000 What is the amount of legal capital? a. 15,500,000 b. 13,000,000 c. 15,000,000 d. 12,000,000 Solution 24-2 Answer b Preference share capital 3,000,000 Ordinary share capital 6,000,000 Subscribed ordinary share capital 4,000,000 Total legal capital 13,000,000 In case of par value share capital, legal capital is the aggregate par value of all shares issued and subscribed. Inthe case of no-par value share capital, /egal capital is the aggregate Stated value of shares issued and subscribed plus any excess over Stated value. This is in accordance with the provision of Corporation Code of the Republic of the Philippines. 331 ys SHAREHOLDERS’ EQUIT Problem 24-1 (IAA) . : -end: i following data at pear Mara Company provided the re Authorized share capital 2/000,00) Unissued share capital 1,000'009 Subscribed share cap ital 400,00) Subscription receivable 500,009 Share premium i 600; Retained earning unappropriated 30000 Retained earnings appropriated 200,000 Revaluation surplus 100°000 Treasury shares, at cost . , : | What total amount should be reported as shareholders’ equity? a. 5,100,000 : b. 5,500,000 c. 4,900,000 d. 4,800,000 Solution 24-] Answer a Authorized share capital 5,000,000 Unissued share capital (2,000,000) Issued share capital 3,000,000 Subscribed share capital 1,000,000 Subscription receivable (400,000) 600,000 Share premium Retained earnings: 500,000 nappropriated 600,000 Appropriated , Revaluation surplus __300,000 900,000 Total 200,000 Treasury shares 5,200,000 ‘ ( 100,000) Shareholders’ equity 70 5,100,00° The subscription receiva ble is a deduction from the related subscribed share capi cri sha pital. Howe ipti i collectible within one year is Hee as eaten receive’ nt asset. 330

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