Reference no: EM133067226
Questions -
Q1. During 2021, Cara Corporation had 2 classes of shares issued and outstanding for the entire year. Additional data are as follows: Ordinary share capital, par $10 - $1,000,000; 7% Preference share capital, $100 par, cumulative - $500,000. The net income for the year is $500,000. How much is the basic earnings per share?
Q2. At the start of the current year, Somi Corporation has issued and outstanding shares total 100,000 shares of $10 par value, Share Premium of $400,000 and Retained Earnings of $360,000. The following transactions occurred during the year:
January 10 - Sold 40,000 shares at $15 per share
March 27 - Purchased 5,000 treasury shares at a cost of $12 per share.
October 31 - Issued $5,000,000 convertible bonds at 120.The bonds are quoted at 98 without the conversion feature.
November 10 - Declared a 2 for 1 split when the market value of the share was $16. December 15 - Sold 20,000 shares at $10 per share.
December 31 - Net income for the year was $550,000
How much is the total shareholders' equity at year-end?
Q3. Selly Company embarked on a promotional program whereby a cup costing $13 each is given away for 10 bottle crowns plus $5. Selly also pays $2 per cup for handling and shipping cost. Selly estimates that only 40% of the bottle crowns in the hands of consumers will be presented for redemption. The following data is available: Bottles sold - 1,000,000 units amounting to $5,000,000; Can openers bought for giveaways - 15,000 units amounting to $195,000; Can openers distributed to customers - 10,000 units. At the end of the first year, what amount must Selly recognize as estimated liability for promotional items outstanding?
Q4. On January 1, 2021, Mariah Company's shareholders' equity comprised of $5,000,000 share capital, par $100, $3,000,000 of share premium and retained earnings of $1,500,000. During the year, Mariah had the following selected transactions in chronological order:
- Corrected overstatement of 2020 net income because of depreciation error, $50,000
- Share dividend of 15% was declared and issued when the shares are selling at $120 per share.
- Declared a cash dividend of $1.75 per share
- Net income for the year amounts to P850,000
How much is the retained earnings balance on December 31, 2021?
Q5. The following data was acquired from Iza Corporation:
- Dividends on its 50,000 shares of 10%, $100 par value cumulative preference share capital have not been declared or paid for 3 years.
- Treasury ordinary shares were acquired at a cost of $1,000,000 during the year. The treasury share had not been reissued as of year-end.
- At year-end, Iza appropriated $3,000,000 of retained earnings for the construction of a new plant.
- Also, $2,000,000 of cash was restricted for the retirement of bonds payable due in the next year.
How much of retained earnings must be appropriated as a result of the given transactions?