Reference no: EM133047452
Question - Sik Corporation has a convertible preference shares with a 2 for 1 ordinary share conversion basis. Other relevant information at January 31, 2021 is as follows:
Preference Share,P40 par, 50,000 shares issued and outstanding- P2,000,000
Ordinary Share Capital, P50 par, 80,000 shares issued and outstanding- P4,000,000
Share Premium-Preference- P300,000
Share Premium-Ordinary- P600,000
Retained Earnings- P750,000
Assuming a 30,000 preference shares was converted, how much will be charged to Retained Earnings as a result of conversion?
A. P630,000
B. P120,000
C. P0
D. P112,500