Reference no: EM132813526
Question
The shareholders' equity accounts of Evermore Corporation, a publicly held company whose shares are traded in the Philippine Stock Exchange, at December 31, 2019, had the following balances:
Ordinary shares, P1 par value, 900,000 shares authorized, 600,000 shares issued and outstanding P 600,000
Preference shares, P100 par value, 6% cumulative; 15,000 shares authorized, 9,000 shares issued and outstanding 900,000
Additional paid-in capital 1,200,000
Retained earnings 3,198,000
Total shareholders' equity P5,898,000
You summarized the following transactions during 2020 and other information relating to the shareholders' equity in your working papers as follows:
January 6, 2020
Issued 22,500 shares of ordinary share to Princess Dorothea Company in exchange of land. On the date issued, the share had a market price of P16.50 per share. The land had a carrying value of P201,000, and an assessed value for property taxes of P135,000.
January 31, 2020
Sold 1,350, P1,000, 12% bonds due January 31, 2022, at 98 with one detachable warrant to each bond. Interest is payable annually on January 31. The fair value of the bonds without the share warrants is 95. The detachable warrant entitles the holder to purchase 10 shares of ordinary share at P10 per share.
February 22, 2020
Purchased 7,500 shares of its own share to be held as treasury share for P24 per share.
February 28, 2020
Subscriptions for 21,000 shares of ordinary share were received at P26 per share, payable 50% down and the balance by March 15.
March 15, 2020
The balance due on 18,000 shares was received and those shares were issued. The subscriber who defaulted on the 3,000 remaining shares forfeited the down payment in accordance with the subscription agreement.
April 30, 2020
Declared a dividend of inventory to ordinary shareholders. The inventory had a carrying value of P910,000; fair value on relevant dates were:
Date of declaration (April 30, 2020) P950,000
Date of record (May 15, 2020) 900,000
Date of distribution (May 31, 2020) 920,000
August 30, 2020
Reissued 3,000 share of treasury share for P20 per share.
September 14, 2020
There were 945 warrants detached from the bonds and exercised.
November 30, 2020
Declared a cash dividend of P2 per share to all ordinary shareholders of record December 15, 2020. The dividend was paid on December 29, 2020.
December 31, 2020
Declared the required annual cash dividends on preference share for 2020. The dividend was paid on January 15, 2020.
January 8, 2021
Before closing the accounting records for 2020, Evermore became aware that no amortization had been recorded for 2019 for a patent purchased on July 2, 2019. The patent was properly capitalized at P480,000 and had an estimated useful life of eight years when purchased. Evermore is subject to 30% regular corporate income tax. The appropriate correcting entry was recorded on the same day.
January 10, 2021
Adjusted net income after tax for 2020 was P1,860,900.
Based on the information above, answer the following:
How much should the retained earnings be decreased as a result of the property dividend declared on April 30, 2020?
How much is the credit to Additional paid-in capital - subscriptions forfeiture in relation to the March 15, 2020 transaction?
How much is the increase in shareholders' equity as a result of the 945 warrants detached and exercised on September 14, 2020?
What is the balance of the Ordinary share account at December 31, 2020?
How much is the total additional paid-in capital as of December 31, 2020?
What is the adjusted balance of retained earnings on December 31, 2020?
How much is the treasury shares as of December 31, 2020?
How much is the total shareholders' equity on December 31, 2020?