AP EXER SHE A
Transcript of AP EXER SHE A
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Solution
Jan 15 Cash (650 shares x P40) 28,000Paid-in capital from treasury share 13,000
Treasury Share 39,000Cost of treasury share: P72,000/1,210 shares = P60 per shareCost of shares sold: 650 shares x P60 = P 39,000
Feb 2 Cash (P90,000 x 103) 92,700Discount on bonds payable 2,700
Bonds payable 90,000Ordinary share warrants 5,400
Price of bonds without warrants attached: 97 x P90,000 = P87,300Value of detached warrants: 90 x P60 = P 5,400
Because value of bonds plus value of detachable warrants is equal to the total issuance price(P87,300 + P5,400 = P92,700), the value assigned to the bonds and warrants is the fair value ofeach.
Mar 6 Cash 24,640Ordinary share subscription receivable 36,960
Ordinary share subscribed 2,800Paid-in capital in excess of par 58,800
Mar 20 Cash 31,680Ordinary share subscription receivable 31,680
Mar 20 Ordinary share subscribed 2,400
Ordinary share 2,400Mar 20 Ordinary share subscribed 400Paid-in capital in excess of par 8,400
Ordinary share subscription receivable 5,280Paid in capital from forfeited share subscription 3,520
Nov 1 Cash (550 s P40) 22,000Ordinary share warrants (55 x P60) 3,300
Ordinary share 1,100Paid-in capital in excess of par 24,200
Answer:1. D 2. B 3. C 4. C 5. D 6. B 7. D 8. D
Solution July 1 Ordinary share, P30 par 3,000,000
Ordinary share, P60 stated value 1,500,000Exchanged 100,000 shares of old ordinary share with a par value of P30 for 25,000 shares of new ordinaryshare with a stated value of P60.
July 1 Retained earnings 900,000Ordinary share, P60 stated value 900,000
Eliminate dividends in arrears on preference share through issuance of 15,000 shares of new ordinary share. July 1 Paid-in capital in excess of stated value 1,500,000
Retained earnings 1,500,000 Applied deficit against paid-in capital created through recapitalization
Oct 1 5% Preference share 600,000Retained earnings 56,250
Cash 556,250Retired 10,000 shares of preference share10,000 shares preference share retired:
Amount paid (10,000 shares x P55) P550,000Dividends for 3 months (P500,000 x .05 x 3/12) 6,250 P 556,250
Nov 10 Cash 3,900,000Ordinary share, P60 stated value 3,600,000Paid-in capital in excess of stated value 300,000
Sold 60,000 shares of ordinary share P65.Dec 31 Income summary 400,000
Retained earnings 400,000Recorded earnings for the 6-month period ended December 31.
Dec 31 Dividends (Retained earnings) 100,000Dividend payable preference 25,000(20,000 x P50 x .05 x )
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Dividend payable ordinary 75,000(100,000 shares x P.75)
SHARE HOLDERS EQUITY Contributed Capital
5% preference share 1,000,000Ordinary share 6,000,000Paid-in capital in excess of stated value ordinary 300,000
Total 7,300,000Retained earnings (accumulated since July 1, 2002) 243,750Total Share holders Equity 7,543,750
On July 1, 2004, 100,000 shares of ordinary share, P30 par, were exchanged for 25,000 shares of ordinary sharewith a P60 stated value, thus creating additional paid-in capital. Such paid-in capital was applied to the eliminationof a P600,00 deficit on this date and also the liquidation of d ividends in arrears on preference share of P900,000through the issue of 15,000 shares of new ordinary. Earnings since July 1, 2004, were P400,000. Charges fordividends since this date were P106,250, and the call premium on 10,000 shares of preference share redeemedwas P50,000, resulting in a retained earnings balance of P243,750.
Answer:
1. B 2. D 3. B 4. C
Solution
a. Memo entry
b. Treasury share 50,000
Cash 50,000
c. Retained earnings 75,000
Property dividends payable 75,000
d. Cash 360,000
Ordinary share 100,000
APIC 260,000
e. Income summary 240,000
Retained earnings 240,000
Answer:
1. C 2. A 3. C 4. B 5. D
Solution
Feb 1 - Land 143,000
Ordinary share 13,000
APIC CS 130,000
Mar 1 - Treasury share 70,000
Cash 70,000
May 10 - Retained earnings 600,000
Property dividend payable 600,000
Oct 1 - Cash 32,000
Treasury share 28,000
APIC TS 4,000
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Nov 4 - Retained earnings 165,000
Cash 165,000
Dec 20 - Retained earnings 12,000
Dividends payable 12,000
Dec 31 - Retained earnings 14,000
Income tax payable 6,000
Patents 20,000
Dec 31 - Income summary 838,000
Retained earnings 838,000
Answer:
1. D 2. A 3. C 4. A 5. B