Reference no: EM133134137

Question - Japan Inc. reported total assets of 12,980,000 retained earnings of P1,460,000 and total liabilities of P4,800,000 in its statement of financial position dated January 1, 2022. The following transactions transpired during the year 2022:

a. Japan issued 300,000 ordinary shares with a par value of 2 for 750,000.

b. Net income during the year amounts to P780,000 while the comprehensive income amounts to P960,000. Included in the computation of net income are unrealized gain of 120,000 and realized loss of P38,000 from trading securities.

c. Included in the January 1, 2022 balance of of shareholder's equity are 20,000 ordinary shares were reacquired from the public at 11 per share. These shares were subsequently issued for P288,000 on June 30, 2022. On August 1, 2022; 15,000 ordinary shares were again reacquired from the public for 15 per share.

d. Cash dividends declared for the outstanding shares during the year amount to P340,000. Dividends were distributed to March 3, 2023.

e. On January 1, 2023, the company sold 60% of its ordinary shares with a total par value of 10 million for 15 million to China Group of Companies to acquire one of its sister corporations.

f. The financial statements were authorized for issue on March 1, 2023.

Required -

1. Determine the balance of shareholder's equity to be shown in the December 31, 2022 statement of financial position.

2. Determine the balance of retained earnings to be shown in the December 31, 2022 statement of financial position.