Reference no: EM132873154

Honesty Corporation has the following capital structure at the beginning of 2019:

8% Cumulative, fully participating, preference shares, P50 par value, 50,000 shares authorized, 12,000 shares issued and outstanding 600,000

Ordinary shares, P10 par value, 200,000 authorized; 147,500 issued and outstanding 1,475,000

Share premium - preference 180,000 Share premium - ordinary 1,180,000

Retained earnings (2,500,000 appropriated for plant expansion) 4,500,000

During 2019, the following transactions occurred:

• February 11 Honesty Company acquired 6,000 preference shares at P70 each and 40,000 common shares at P22 each. Honesty Company is using the cost-method in recording treasury shares.
• March 31 Issued 2,000 preference treasury shares at P75 per share.
• April 7 Issued 15,000 ordinary treasury shares at P23 per share.
• July 1 Issued 1,500 preference treasury shares at P68 and 20,000 ordinary shares at P19 each. August 15 Plant expansion was completed.
• September 2 Retired the remaining preference and ordinary treasury shares.
• October 1 Board of directors appropriated P2,500,000 for plant expansion in Batanes. Likewise, the Board issued a 3-year, 10%, P1,500,000 face value bonds to partially fund the construction. A sinking fund was set-up for the extinguishment of the bonds at their maturity.
• December 31 Net income for the period P1,400,000. Total cash dividend declared and paid P500,000. No dividends have been declared in 2018. A property dividend was likewise declared, the distribution of which is on January 6, 2020. The carrying amount of the property declared as dividend was P800,000; the fair value if which was P1,000,000.

Required:

Question 1. Upon retirement of the preference shares, retained earnings shall be debited by

Question 2. Upon retirement of the ordinary shares, retained earnings shall be debited by

Question 3. The amount of cash dividends to be distributed to the ordinary shareholders is

Question 4. The retained earnings - appropriated at the end of 2019 is

Question 5. The total shareholders' equity at December 31, 2019 is