Quiiz 1
Quiiz 1
Quiiz 1
An entity undertakes an initial public offering for the listing and issuance of 700,000 new shares
and listing of 300,000 existing shares. The entity incurred the following costs:
• Documentary stamp tax, P25,000
• Fairness opinion and valuation report, 125,000
• Tax opinion, 100,000
• Newspaper publication, 200,000
• Listing fee, 300,000
• Other joint costs, 275,000
Determine the amount of expense. 300,000
Computational. An entity issued 10,000 preference shares at the par value of P100 per share. The preference
shares have a mandatory redemption by the issuer feature for P1,200,000. The issuance was recorded correctly. If
the preference shares are redeemed by the issuer for P1,200,000, the amount of loss that will be debited to
retained earnings is 0
Computational. The entity issued 10,000 callable preference shares with par value of P100 at P120 per share.
Subsequently, the preference shares are called in at P150 per share. The amount of loss that will be debited to
retained earnings is 300,000
Computational. On December 31, 2019, Rhea Company reported P6,000,000 of appropriated retained earnings
for the construction of a new office building which was completed in 2020 at a total cost of P8,000,000. In 2020,
Rhea appropriated P10,000,000 of retained earnings for the construction of a new plant. Also, cash of P5,000,000
was restricted for the retirement of bonds payable due in 2021. In its December 31, 2020 balance sheet, Rhea
should report what amount of appropriated retained earnings? 10,000,000
Computational. During the current year, an entity issued 20,000 preference shares of P100 par value for
P3,250,000 with 20,000 warrants to acquire 10,000, P50 par value ordinary shares at P60 per share. On the date of
the issuance the market values are 120 for preference and 10 for warrant. If subsequently, 75% of the warrants
were exercised, the amount that will be credited to share premium-issuance is 1,000,000
Computational. Tania Company's stockholders' equity section of its December 31, 2019 balance sheet was as
follows:
• Common stock, authorized 100,000 shares; issued 60,000 shares, P100 par, P6,000,000
• Additional paid in capital, P3,000,000
• Retained earnings, P4,000,000
• Treasury stock, 10,000 shares at cost, P900,000
During 2020 Tania reissued 3,000 shares of the treasury stock at P120 per share and the remaining were retired.
The net income for the year is P455,700. The retirement of treasury shares has resulted to a share premium of
how much? 70,000/3,160,000
Computational. Tania Company's stockholders' equity section of its December 31, 2019 balance sheet was as
follows:
• Common stock, authorized 100,000 shares; issued 60,000 shares, P100 par, P6,000,000
• Additional paid in capital, P3,000,000
• Retained earnings, P4,000,000
• Treasury stock, 10,000 shares at cost, P900,000
During 2020 Tania reissued 3,000 shares of the treasury stock at P120 per share. No other treasury stock
transactions occurred during 2020. As a result of reissuance, how much is the share-premium arising from
treasury transaction? 90,000
Computational. On December 31, 2020, the board of directors of Osaka Company declared a cash dividend of
P800,000 to shareholders of record on January 15, 2021, and payable on February 15, 2021. The entity reported
the following data on December 31, 2020 before declaration of dividend:
Accumulated depletion (yet unrealized buried in inventory), P500,000
Share capital, 9,000,000
Share premium, 300,000
Retained earnings – January 1, 2020, 600,000
Net Income for 2020, 150,000
What amount should be reported as liquidating dividend? 200,000
Computational. Baby Jean Company was incorporated on January 1, 2020, with the following authorized
capitalization:
• 200,000 shares of common stock, no par, stated value P100 per share
• 200,000 shares of 10% cumulative preferred stock, par value P50 per share.
During 2020 Baby Jean issued 150,000 shares of common stock for a total of P18,000,000 and 50,000 shares of
preferred stock at P60 per share. In addition, on December 15, 2020, subscriptions for 20,000 shares of preferred
stock were taken at a purchase price of P100. These subscribed shares were paid for on January 2, 2021. Net
income for 2020 was P5,000,000. What should Baby Jean report as total contributed capital on its December 31,
2020 balance sheet? 23,000,000
Computational. Levis Company was organized at the beginning of current year with 100,000 authorized shares of
P100 par value.
• January 1, sold 30,000 shares at P150 per share
• February 1, issued 2,000 shares for legal services with a fair value of P250,000. The shares on this date are
quoted at P140 per share
• March 15, purchased 5,000 treasury shares at a cost of P120 per share
• October 31, issued P5,000,000 convertible bonds at P120. The bonds are quoted at 98 without the conversion
feature.
• November 15, declares a 2 for 1 share split when the market value of the share was P160.
• December 15, sold 20,000 shares at P75 per share.
• December 31, the net income for the year was P2,000,000.
What is the total shareholders’ equity at year-end?8,750,000
Computational. Effective December 28, 2020, the stockholders of Abner Company approved a 2-for-1 split of the
company’s common stock and an increase in authorized common shares from 200,000 shares (par value P100 per
share) to 400,000 shares (par value P50 per share). Abner’s stockholders’ equity accounts immediately before
issuance of the stock split shares were as follows:
• Common stock (par value P100; 200,000 shares authorized; 150,000 shares outstanding) ,P15,000,000
• Additional paid-in capital, P5,000,000
• Retained earnings, P8,000,000
What should be the balance in Abner’s common stock account immediately after the stock split is effected?
15,000,000
Computational. Bloom Company issued 8,000 convertible preference shares with P100 par value at P105 per
share. One preference share can be converted into three ordinary shares with P25 par value at the option of the
shareholder. Subsequently, all of the preference shares were converted into ordinary shares. The market value of
the ordinary share on the date of conversion as P30. What amount should be credited to share premium as a
result of the issuance of the preference shares and the subsequent conversion into ordinary shares? 240,000
Computational. On December 31, 2020, when XY2 Company's stock was selling at P36 per share, its stockholders'
equity accounts were as follows:
• Common stock (P20 par value) 100,000 shares issued and outstanding, P2,000,000
• Contributed capital in excess of par, P800,000
• Retained earnings, P4,550,000
A 100 percent stock dividend was declared and issued. Because of this declaration, how much is its impact
to shareholders’ equity section? 0
Computational. Meozah Company reported the following in its statements of stockholders’ equity on January 1,
2020:
• Common stock, P50 par value, authorized 400,000 shares, issued 200,000 shares, P10,000,000
• Additional paid-in capital, P5,000,000
• Retained earnings, P5,000,000
• Treasury stock, at cost, 20,000 shares, P1,500,000
The following transactions occurred in 2020:
• June 1, 5,000 shares of treasury stock were sold for P500,000
• August 31, 50,000 shares of previously unissued common stock were sold for P120 per share
• October 1, Distribution of a 2-for-1 stock split, resulting in the common stock’s per share par value being
halved.
Meozah accounts for treasury stock under the cost method. In Meozah Company’s statement of stockholder’s
equity, determine the number of outstanding shares 470,000
Computational. A large company began the year with P1,000,000 of unappropriated retained earnings and
P200,000 of appropriated retained earnings. During the year, it created P500,000 of new appropriations and
reversed P600,000 of appropriations. It had income for that year of P2,500,000. As of the end of the year, how
much of the retained earnings is shown under reserves? 100,000
Computational. Axis Company has the following information in its stockholders’ equity accounts:
• Preferred stock, P50 par value, 22,000 shares, P1,100,000
• Treasury shares, preferred (at cost), 2,000 shares, P150,000
• Common stock without par value (at issue price) 30,000 shares, P4,500,000
• Retained earnings, P7,000,000
Due to the substantial amount of retained earnings, the company’s Board of Directors resolved “to pay a 100%
stock dividend on all shares outstanding capitalizing amounts of retained earnings equal to the par value and the
issue price of the preferred and common stock outstanding, respectively, and thereafter to pay a cash dividend of
10% on preferred stock and a cash dividend of P10 a share on common stock.” What is the total balance of the
stockholders’ equity of Axis Company after effecting the above transactions? 11,650,000
Computational. Tania Company's stockholders' equity section of its December 31, 2019 balance sheet was as
follows:
• Common stock, authorized 100,000 shares; issued 60,000 shares, P100 par, P6,000,000
• Additional paid in capital, P3,000,000
• Retained earnings, P4,000,000
• Treasury stock, 10,000 shares at cost, P900,000
During 2020 Tania reissued 3,000 shares of the treasury stock at P120 per share. No other treasury stock
transactions occurred during 2020 and the net income for the year is P1,275,000. Determine the balance of the
stockholders’ equity by the end of 2020. 13,735,000
Computational. Tania Company's stockholders' equity section of its December 31, 2019 balance sheet was as
follows:
• Common stock, authorized 100,000 shares; issued 60,000 shares, P100 par, P6,000,000
• Additional paid in capital, P3,000,000
• Retained earnings, P4,000,000
• Treasury stock, 10,000 shares at cost, P900,000
During 2020 Tania reissued 3,000 shares of the treasury stock at P120 per share. The net income for the year is
P829,040 and declared 5% cash dividends. Tania voluntarily restrict second P300,000 installment for its future
acquisition. Determine the total balance of reserves. 3,300,000
Computational. Tania Company's stockholders' equity section of its December 31, 2019 balance sheet was as
follows:
• Common stock, authorized 100,000 shares; issued 60,000 shares, P100 par, P6,000,000
• Additional paid in capital, P3,000,000
• Retained earnings, P4,000,000
• Treasury stock, 10,000 shares at cost, P900,000
During 2020 Tania reissued 3,000 shares of the treasury stock at P120 per share. The net income for the year is
P829,040 and declared 5% cash dividends. Tania voluntarily restrict third P250,000 installment for its future long-
term asset acquisition. Determine the total balance of retained earnings (unrestricted) by the end of the year
2020. 3,680,540
Computational. Tania Company's stockholders' equity section of its December 31, 2019 balance sheet was as
follows:
• Common stock, authorized 100,000 shares; issued 60,000 shares, P100 par, P6,000,000
• Additional paid in capital, P3,000,000
• Retained earnings, P4,000,000
• Treasury stock, 10,000 shares at cost, P900,000
During 2020 Tania reissued 3,000 shares of the treasury stock at P120 per share and the remaining were retired.
The net income for the year is P805,700. Determine the balance of the stockholders’ equity by the end of 2020.
13,265,700
Computational. Tania Company's stockholders' equity section of its December 31, 2019 balance sheet was as
follows:
• Common stock, authorized 100,000 shares; issued 60,000 shares, P100 par, P6,000,000
• Additional paid in capital, P3,000,000
• Retained earnings, P4,000,000
• Treasury stock, 10,000 shares at cost, P900,000
During 2020 Tania reissued 3,000 shares of the treasury stock at P120 per share. The net income for the year is
P1,005,735. Determine the balance of the retained earnings, unappropriated by the end of the year assuming
Tania voluntarily restrict first P500,000 installment for its future construction of cash-generating project.
3,875,735